G I o b a I E n v i r o n m e n t F a c ii ty I2 5)I STUDY OF GEI's OVERALL PERFORMANCE GARETH PORTER RAYMOND CLEMENCON WAAFAS OFOSU-AMAAH MICHAEL PHILIPS GEF G L O B A L E N V I R O) N M E N T F A C I L I T Y STUDY OF GEF's C)VERALL PERFORMANCE GARITH PORTER RAYMOND CLEMENCON WAAFAS OFOSU-AMAAH MICHAEL PHILIPS TEAM MEMBERS Core Team: Gareth Porter, Team Leader Raymond Cl1menqon Waafas Ofosu-Amaah Michael Philips Gerardo Budowski International Consultants: Toufiq A. Siddiqi Eric Martinot Wouter Justus Veening Richard H. Warner National Consultants: Jorge Luis Frangi, Argentina Mary Helena Allegretti, Brazil Gerardo Budowski, Costa Rica Edmundo de Alba Alcatras, Mexico Abou Makari Bamba, Cote d'lvoire Baha El Din, Egypt Rosemary Achieng, Kenya Norbert Nziramasanga, Zimbabwe Raed Daoud, Jordan Ni Wiedou, China Kalipada Chatterjee, India Yani Witjaksono, Indonesia Jose E. Padilla, Philippines Nguyen Ngoc Ly, Vietnam Pawel Tekiela, Poland Vassily Sokolov, Russia The views expressed in this study are those of the authors and do not necessarily rep- resent the views of all the team members, nor the GEF. Foreword i FoFuwoIm A t its October 1996 meeting, the GEF Council asked the GEF Senior Monitoring and Evaluation Coordinator to undertake a study of GEF's overall performance. This is the first study of the restructured GEF's overall accomplishments. An independent evaluation of GEF's Pilot Phase was organized by the Implementing Agencies' evaluation departments and completed in 1993. The main audience for the study, in addition to the GEF Council, consists of the participants at the GEF Assembly on April 1-3, 1998 in New Delhi. Other audiences are various cooperating partners at the country level, the secretariats of the conventions for biodiversity and climate change, implementing and executing agencies, nongovernmental organizations (NGOs), and private enterprises. The terms of reference for the study was prepared by the GEF Senior Monitoring and Evaluation Coordina- tor after consultation with Implementing Agency officials, GEF Council members, the secretariats of the conven- tions for climate change and biological diversity, non-governmental organizations and others in April and May 1997. The terms of reference constitutes Annex 1. The Senior Monitoring and Evaluation Coordinator recruited the core study team, composed of Gareth Porter (team leader), Raymond Clemencon, Waafas Ofosu-Amaah, Michael Philips, and Gerardo Budowski. In addition, another five intemational and sixteen national consultants were recruited. Their names are listed on the preceding pages. All team members were selected on the basis of their high competence in requisite fields and their independence relative to GEF and its projects. The Senior Monitoring and Evaluation Coordinator also appointed the Senior Advisory Panel for the study. This consists of experienced and knowledgeable persons from four developing and four industrial countries. The members are M. S. Swaminathan, India (chairman); Maria Tereza Jorge Padua, Brazil; Brice Lalonde, France; Hisham Khatib, Jordan; Wakako Hironaka, Japan; Rudolf Dolzer, Germany; Edward Ayensu, Ghana; and Richard Bissell, United States. The principal objectives of the panel, as laid down in the TOR, are to provide strategic guidance on the approach and implementation of the study and added assurance that it is complete in coverage and a fully independent review of the accomplishme-nts of GEF in the areas to be examined. The panel met on June 27 and October 27-29 in 1997 and on January 17, 1998. The panel's statement on the report is appended as Annex 2. The team members collected data for the period May-December 1997. Documents were collected from a wide variety of sources, and meetings were held with all GEF entities, the convention secretariats, and other international organizations. The study is particularly built on data collected by the core team members in ten countries: Brazil, China, Egypt, India, Indonesia, Kenya, Mexico, Poland, Russia, and Zimbabwe. Additional material was collected through smaller studies by local consultants in Argentina, Costa Rica, Cote d'lvoire, Jordan, Philippines, and Viet Nam. Interviews were held in the sixteen countries with council members, GEF Focal Points and other relevant government departments, implementing and executing agencies, NGOs, research institutions, and private enter- prises as well as project personnel and stakeholders. Annex 3 lists the institutions and projects visited. The countries and projects studied represent a wide variety of efforts, country contexts, and policies, although they may not be representative of all the 155 participating countries in GEF and all the variables that surround GEF- assisted projects. Although desirable, that was not feasible. U Stutdy of GEF's Overall Performance The first draft study was sent to the GEF Secretariat, Implementing Agencies, and the Scientific and Technical Advisory Panel (STAP) for comments on December 2, 1997. Their comments were received around December 10, and the team made such amendments on this basis as it deemed required, especially concerning factual errors, misunderstandings, and the like. The second draft was dispatched to the GEF Council, convention secretariats, the sixteen countries, GEF entities, Implementing Agencies, Senior Advisory Panel, and the GEF-NGO Network on December 19 for comments. On the basis of the comments received, some amendments were made and the report was finalized on February 5. I am truly grateful to all those who participated and contributed to the study, especially in the sixteen countries. Athough a large number of consultants and informants provided the information on which the studv is based, the views expressed in this final document are those of the authors, who are listed above. These views do not necessarily represent the views of all team members, nor GEF. The description of GEF in Chapter 1. Introduction was provided by the Senior Monitoring and Evaluation Coordinator. It is the judgment of the Senior Advisory Panel that the study represents an honest and independent assessment of GEF. It is my hope that the report will contribute to improving future endeavors to protect the global environment. Jarle Harstad Senior Monitoring and Evaluation Coordinator Preface iii PIREFACE In the short time that GEF has had to develop since its 1994 restructuring, it has only recently begun to create a portfolio of projects that reflect its new management structure, programming strategy and project cycle procedures. It is thus too early to attempt to gauge the success of the GEF in accomplishing its objectives. Therefore the study is not aimed at evaluating the performance of the GEF in terms of its impact on the global environment in the four focal areas. Instead, this study is explicitly directed at a set of issues related to the performance of GEF in terms of institutions, procedures and policies. Since the restructuring, a number of concems regarding the GEF's identity, internal organization and project development procedures have been addressed. Thus, the study team identified indicators of performance in different areas of activity-from the effectiveness of the GEF Focal Point system in recipient countries to the effectiveness of the institutional structure to the degree of mainstreaming of the global environment in the regular operations of the three 'Implementing Agencies. The issues analyzed by the study team for the report were specified by the Terms of Reference (TOR) for the study (Appendix 1). The TOR included a large nurnber of issues related to GEF's overall performance. Unfortu- nately, the team was unable to address every issue in the TOR due to the time constraints, unavailability of reliable quantitative data and the inherent limitations of relatively brief country visits. Specifically, the team has not addressed the adequacy of procedures for drawing and applying lessons from project experience, the efficiency of GEF in disbursing resources after project approval, or the extent to which GEF has been able to clearly identify and measure global benefits expected from its projects. The team has made an effort to be explicit about the limitations of data wherever appropriate. In most issues analyzed by the study team, the distinction between the Pilot Phase experience (1 991-94) and that of GEF 1 (since the end of 1994) is of critical irmportance. One way of gauging GEF's overall performance is by comparing the situation at the end of GEF 1 with that which prevailed during the Pilot Phase. The team has made that comparison explicitly where relevant. For some issues, however, such as the impact of GEF on country policies, the distinction between Pilot Phase project-s and GEF 1 projects may not be significant, and so it has not been highlighted. The team has made a number of recommendations for consideration by the GEF throughout the text. Of these recommendations, it has identified seven which it regards as being of highest priority. These priority recommendations are highlighted in the Executive Summary of the report. The team has summed up its overall evaluation of the GEF's performance in the Conclusions to this report (Section VIII). In that section, we have been careful to make judgments only upon reflection on the aggregated findings from each subsection of the report. Gareth Porter, Team Leader Raymond Clemencon Waafas Ofosu-Amaah Michael Philips Table of Contents v TABLE OF CONTENTS Foreword ............................................. i Preface ............................................. iii Acronyms and Initials ............................................. ix Executive Summary ............................................. xi I. Introduction to the GEF ............................................. 1 II. Provision of Resources for the Global Environment ............................................. 4 A. Introduction .................................................................... ................................................................... 5 B. Are GEF Resources New and Additional? .......................................................................................... 5 Conclusions ..........................................................6........... .............................................. 6 Recommendations ............................ 6 C. Comparison of GEF Funding with All Sources of Financing for the Global Environment. 6 Conclusions .8......................................... ............................................... .............. 8 Recommendation ........ 8 D. Leveraging Additional Resources ...............................................8......................................................8 Leveraging Through Cotinancing and Associated Projects ................. 8 Conclusions ............................................................................................................................ 13 Recommendations ...................................... 13 Leveraging Private Sector Investment ......................................... .................................................. 14 Conclusions .............. ................................................................................... 17 Recommendations ........ 17 III. Issues at the Country Level ........ 18 A. The Focal Point System in Recipient Countries .18 Conclusions .21 Recommendations .21 B. The Requirement for Projects to Be Country Driven .21 Country-Driven Projects .21 Conclusions ............ ......................................................................................................... 23 Recommendations ....... 24 C. Contribution of GEF to Awareness of Global Environmental Issues .24 Indicators of Knowledge of GEF .........................................2..................................... 24 Indicators of Awareness of Global Environment Issues ............. 25 Conclusions ................................................................................... ........................................ 25 Recommendations. ...................................................... 26 D. Stakeholder Participation in GEF Projects .......................... ............................................................ 26 The Background: Previous Evaluations ...... 26 The Policy Framework for Stakeholder Participation in GEF Projects .27 Stakeholder Participation in GEF Project's ...............................2....................................... 28 vi Stud' of GEF's Overall Performance E. Experiences with Stakeholder Participation by Focal Area .............................................................. 29 Conclusions ........................................................................... 30 Recommendations .......................................................................... 30 F Impacts on Country Programs and Policies ........................................................................... 31 Conclusions .......................................................................... 32 G. Handling of Policies and Activities That Could Undermine Project Success .................................... 32 Conclusions .......................................................................... 34 Recommendations .......................................................................... 34 H. Financial Sustainability of GEF Projects .......................................................................... 35 Climate Change Projects ........................................................................... 35 Biodiversity Projects .......................................................................... 36 Conclusions .......................................................................... 37 Recommendations .......................................................................... 37 IV. Institutional Roles and Relations ............................................................................. 38 A. Mainstreaming of the Global Environment by Implementing Agencies ........................................... 38 Mainstreaming in the World Bank ....... ...................................................................... 38 Amount of Cofinancing of World Bank GEF Projects and Associated Bank Loans .................. 38 Lending for the Global Environment in the World Bank's Regular Portfolio ............................ 40 Incentives to World Bank Staff to Encourage or Manage Projects with Global Environmental Benefits ............................................................................. 43 Extent and Quality of Integration of Global Environmental Concerns into Sectoral Lending Strategies ............................................................................. 43 Programming on the Basis of Global Environmental Objectives .............................................. 45 Mainstreaming in the International Finance Corporation ........................................................ 46 Conclusions .............................................................................. 46 Recommendations ............................................................................. 46 Mainstreaming in UNDP. ............................................................................. 47 Financing of GEF Projects and Association of GEF Projects with Non-GEF UNDP Projects ... 47 Funding of Non-GEF UNDP Projects That Provide Global Environmental Benefits ................ 48 Integration of GEF and Global Environment into Country Cooperation Frameworks ............. 49 Staff Incentives for Work on GEF Projects ............................................................................. 51 Conclusions ............................................................................. 51 Recommendations ............................................................................. 51 Mainstreaming in UNEP ............................................................................. 51 Conclusions ............................................................................. 53 Recommendations ............................................................................. 53 B. Cooperation Between GEF and the Conventions ............................................................................. 53 Guidance to GEF from the Conventions ............................................................................. 53 Conclusions ............................................................................. 56 Recommendations ............................................................................. 56 GEF Financing of Enabling Activities ............................................................................... 56 Conclusions ............................................................................. 57 Recommendations ............................................................................. 57 C. Roles, Responsibilities, and Relations .............................................................................. 57 Using the Comparative Advantages of Implementing Agencies ..................................................... 57 The Implementing Agency "Monopoly" Issue ............................................................................. 58 Conclusions ............................................................................. 60 Recommendations .............................................................................. 60 Table of Contents vil Secretariat-Implementing Agency Consuttations on the NVork Program ........................................ 60 Conclusions ............................................................................................................................ 61 Mechanisms for Coordination .........................................................................................1.............. 61 Joint Pipeline Reviews .............................. 61 Focal Area Task Forces .....................6......................................................... II ........................... 62 Executive GEFOP .............................. 62 Conclusions ............................................................................................................................ 63 The Role of the Scientific and Technical Advisory Panel .......... ..................................................... 63 Conclusions ...........................................................................64............................................. 64 Recommendations ................. ................................................................................................. 64 V GEF Project Cycle Procedures ....................................................... 65 A. Implementing Agencies Project Cycles ........................ .................................................................. 66 Conclusions ........................................................................ 69 Recommendations ............. 69 B. The Incremental Cost Requirement ............. 69 Conclusions ............................................................................................................................ 71 Recommendations ................................................................................................................. 71 C. GEF Council Review of Projects ........ .............................................................................................. 71 C o n clu sio n s ............................................................................................................................ 7 2 Recommendations ............................................... ....... ..7... ..... 72 VI. Programming Issues . 73 A. Role of Various Factors in Determining the GEF Portfolio ............................................................... 73 B. Overall Programming Issues ....... 75 Allocation of Resources Among the Focal Areas ............................................................................ 75 Conclusions ....... 75 Balance Between Investment and Noninvestment Activities ....... 75 Conclusions ....... 77 C. Programming Issues in Biodiversity ............................................... 7.................. 77 Conclusions ........ ..................................................................... .............................................. 80 Recommendations ...................................................................1.................. 81 D. Programming Issues in Climate Change ................... 81 Conclusions ................................... ...................................................................................... 83 E. Programming Issues in International W aters ................................................................................... 83 Conclusions .................................................................................................... 85 E The Application of Incremental Costs as a Plrogramming Tool ....... 85 Conclusions .................................................................................................................. 87 VII. Follow-up to the Pilot Phase Evaluation .................... 88 Overall Assessment of the Follow-Up to the P'ilot Phase Evaluation .92 VIII. Conclusions .93 A. Resource Mobilization .93 B. Country-Level Issues ................. ...................... ............................................................................... 93 C. Institutional and Project Cycle Issues ............................................. 94 D. Programming Issues ............................... 95 E. Overall Conclusion ......... ___......... 95 viii study of GEFs Overiall Peiformance Annexes ............................................................... 96 1. Terms of Reference ......................................... ........... .......... 96 2. Report of International Expert Advisory Panel ................................................................ 102 3. List of Interviews and Project Site Visits ................................................................. 106 Tables 1. Cofinancing and Actual Leveraging in A Sample of Eighteen GEF Projects ................ ...................... 10 2. WN7orld Bank GFF Projects with Private Sector Commitments ......................................................... 15 3. Description of GEF Focal Point Systems in Ten Countries .............................................................. 19 4. Financing for Biodiversity Proection through World Bank Loans .................................... ................. 41 5. References to GEF in a sample of CCFs ............................................................... 50 6. Causes of Delays in Project Approval in Ten Country Studies .......................................................... 66 7. Distribution of GEF Funding by Project Type .......... ..................................................... 76 Figures 1. GEF: Institutional Structure ........................................ ..................... 3 Acronyms and Initiais iX ACRONYMIS AND INMALS CAS Country Assistance Strategy CBD Convention. on Biological Diversity CEO Chief Execative Officer COP Conferences of the Parties CCF Country Ccioperation Framework (of UNDP) DAC Development Assistance Committee EA Enabling Activity FCCC Framework Convention on Climate Change GEFOP GEF Operations Committee IFC International Finance Corporation MOEF Ministry of Environment and Forests NGO Non-Governmental Organization OECD Organisation for Economic Cooperation and Development ODA Official Development Assistance OP Operational Program PDF Project Preparation and Development Facility PIR Project Implementation Review PV Photovoltaic QOR Quarterly Operational Report SAP Strategic Action Program SGP Small Grants Programme (of UNDP) STAP Scientific and Technical Advisory Panel TDA Transboundary Diagnostic Analysis TOR Terms of Reference UNDP United Nations Development Programme UNEP United Nations Environment Programme Executive Summary xi EXECUflVE SUMMARY I. INIRODUCTiON other funding, because reliable and comparable data were unavailable. I However, it found the GEF to be the This report presents the findings and recommen- largest funder in the international waters focal area. dations of the Study of the Overall Performance of the The team also found that some agencies have signifi- Global Environment Facility, which was requested by cantly increased their funding in biodiversity and cli- the GEF Council at its October 1996 meeting. The mate from previously low levels. However, it found study focused on a set of issues related to institutions, GEF's role in funding activities that benefit the global procedures, policies and programming of the GEF. environment to be distinct in several ways in terms of The study team proposed a number of recommer,da- its programming and institutional strengths. tions for consideration by the GEF, including seven priority recommendations which are highlightec. in Recommendations: GEF should regularly review this executive summary. and compare its own portfolio and project pipeline with those of other institutions to ensure that it is either provid- H. PRovisioN oF REsouRCEs FoR THfE GLOBAL ing significant additional resources or demonstrating a ENviRoNmENT comparative advantage over other institutions involved in funding the same activities. In this regard, particular atten- tion should be paid to GEF supportfor solar photovoltaics, The study team analyzed issues related to the energy-efficient lighting, andbiodiversity trustfunds. provision of resources for the global environment both directly through funding of the GEF itself and indirectly GEF should work with the OECD and other appro- through leveraging of financing by other agencies. priate international institutions to ensure that reliable, comparable data on financing measures to protect the glo- New and additional resources: The study team bal environment, including data on different types of found that the concept of "new and additional re- projects, is compiled and made available to the public. sources" has not been defined by the internaticnal bodies that have agreed on it as a principle. Therefore, Leveraging of additional resources: The study it could not establish whether or not GEF resources are team found that GEF grants have leveraged additional truly new and additional. It also found that a possible funding for global environmental benefits from both indicator of additionality is whether the GEF is treated Implementing Agencies and other funding sources. On as distinct from general development cooperatior. in balance, the team found that the GEF has been more national budgetary processes, and that in some coun- successful in mobilizing cofinancing during GEF 1 tries this distinction has not been maintained. than in the Pilot Phase. However, based on its study of a sample of 18 projects, the team believes that the Recommendations: The GEF Council should ad- actual level of leveraging, strictly defined, has been dress the needfor a clear definition of "new and additional" significantly smaller than the total level of cofinancing financingfor the GEF, including the indicators that shculd reported. The team found that a high proportion of be used in determining additionality. World Bank loans that cofinance GEF projects for climate and biodiversity have genuinely leveraged ad- Donor countries should consider separating budget ditional financing during GEF 1. However, in some lines for global environmental measures in developing instances such associated loans have brought disad- countries and for contributions to GEF from budget lines vantages, such as project delays. The team concluded for development cooperation. that there is a danger in giving too much emphasis to leveraging as a measure of the GEF's success, and that Comparison of GEF with other sources: The it should be considered alongside a number of other study team could not determine the significance of the relevant indicators, such as GEF's impacts on policies GEF's funding for biodiversity and climate relative to and programs and the replicability of GEF projects. xii Sutdy of GEF's Overall Performance The study team was unable to conduct a systematic III. ISSUES AT THE COUNTRY LEVEL analysis of the likelihood that GEF projects will be replicated. The Focal Point system in recipient countries: The study team found that the Focal Point system is Recommendations: The GEF should adopt a rig- not yet adequately institutionalized in some recipient orots definition of "leveraging" that includes only funding countries. Most have not set up formal coordinating that is additional to existing funding patterns and that is mechanisms for interacting with relevant government expected to create global environmental benefits. It should offices and other country stakeholders. Some Opera- apply this dcfinition in the Quarterly Operational Report tional Focal Points are not clear on their roles. Others and other relevant GEF documents. Implementing Agen- have not been able to fully carry out their coordinating cies should apply this more rigorous definition in their own functions because of institutional weaknesses such as databases and reports on cofinancing of GEF projects. the inability of environment ministries to get more powerful ministries to cooperate with them. In some When there is sufficient experience with implementa- cases, Focal Points have tended to limit information to tion of GEF projects, the GEF's Senior Monitoring and a rela.ively narrow circle of government stakeholders. Evaluation Coordinator should commission a study of the replicability of projects in the GEF portfolio. Priority Recommendation: Leveraging resources from the private sector: The Focal Point System The study team found that the GEF has been able to mobilize a small but growing level of private sector In order to enable Operational Focal Points financing of GEF projects, but comparatively little by to be more effective advocatesfor GEF issues mainstream private financial institutions. Major barri- in their country, the GEF Secretariat and ers to increasing support from the financial sector Implementing Agencies should broaden the exist, particularly the GEF's long and complex ap- existing Project Development Workshopfor- proval procedures and the greater risk of global envi- mat by involving the Operational Focal ronmental projects compared with normal commercial Points as much as possible in planning and projects. However, the team notes that GEF assistance execution and by focusing more on the coor- can be provided in a way that reduces risks to private dination and information dissemination firms and financial intermediaries and does not subsi- functions of the Operational Focal Points. dize private profit. The GEF should provide resourcesfor trans- lation of basic GEF documents into the local Priority Recommendation: Private Sector langguage of those countries requiring such translated documents. The GEF Secretariat and Implementing Agencies should engage business and banking associations and mobilizefinancingfrom in- The requirement for projects to be country- dividual private financial sector companies, driven: The study team found that the degree to which such as banks, insurance companies and pen- a project is "country-driven" is related primarily to the sion funds. To interest the financial sector in degree of country involvement in project design and GEF projects, the GEF should use the "incre- development. In most cases projects were either origi- mental risk" of a potential private sector GEF nated in part by the recipient country or the country project as a way of determining the size of the played an active role in helping to develop it. This GEF grant. helped ensure their ownership of the project. The study team found some cases in which the "country GEF should identify and apply techniques for drivenness" of a project was slight but in which coun- reducing the risk of the private investors of try ownership was ensured by the fact that the country participating in GEE projects, such as using valued the project outcomes. The team found other GEFfunds to provide loan guarantees. cases, primarily global projects, in which neither the involvement of the government nor its interest in Executive Sammary xiii project outcomes was sufficient to generate country and comprehensive plans for public participation and ownership. The team also found that the use of foreign consultation with multiple stakeholder groups, espe- consultants, although necessary in many instances, has cially in the biodiversity focal area. Most of the projects been criticized by recipient countries and tends to are in the early stages of implementation, but the study reduce local involvement necessary for projects tc be team found that some projects are already including country driven and for recipient country ownership. local stakeholders in key project activities. Projects involving trust funds in particular have provided inno- Recommendation: The GEF Council should aclopt vative opportunities for different stakeholders to par- a policy, paralleling that for stakeholder participation, ticipate in the same project at policy and operational aimed at prornoting the greater- use of local and regional levels. In some cases, however, the team found that consultants in projects; encouraging an appropriate mbc of local communities had not been provided with feed- local and foreign experts in GEF projects; and securing back on the results of consultations. greater recipient government participation in the screen- ing, short-listing and selection of project consultants. Recommendation: The GEF Secretariat should work with lrnplementing Agencies to develop quantitative Contribution of GEF to awareness of global and qualitative indicators of successful stakeholder involve- environment: The study team found that awarer-ess inent at different stages of the GEF project cycle, and to and understanding of the GEF and global environment document best practices of stakeholder participation by issues was very low outside the relatively small circle of focal area. officials involved with GEF projects, and that NGOs and the private sector generally know little or nothing Impacts on country programs and policies: about the GEF. However, the team did find from its Based on its analysis of projects in the ten countries country studies that, in some cases, the GEF has made visited by the team and six other country reports by contributions to awareness of global environmental local consultants, the study team found that in some problems among strategically important constitumn- cases, GEF projects have had significant impacts on cies. country policies and programs that go beyond the immediate objectives of the project. These impacts include establishing new mechanisms for Priority Recommendation: intragovernment coordination and regional or subre- Communications and Outreach gional collaboration on issues of global environmental importance, increasing investment in, or priority The GEF Council should authorize and ad- placed on, a particular technology or method for ad- equatelyjiand the development of a GEF out- dressing a global environmental problem, persuading reach and communications strategy that the government to accept a greater degree of stake- targets GEF's multiple constituencies, includ- holder involvement in projects for the global environ- ing the Focal Points and relevant government ment, and contributing to the development of a agencies, NGOs and civil society, the media strategy or action plan. Given the relatively small size and the pnvate sector. The strategy should of GEF projects, the team found that these changes rely on simple, user-friendly materials about represent a positive achievement. the GEF and its operations, and should in- clude provision of basic GEE documents in Handling of policies and activities that could local languages. This strategy should be coor- undermine project success: In a number of instances, dinated with the broadening of the Project either government sectoral or macroeconomic policies Development Workshops. or private sector economic activities could undermine the success of GEF projects. The team analyzed a sample of seven projects in which risks to project Stakeholder participation in GEF projects: success were posed by such policies or activities. The The study team found that the issuance of GEF guide- team found that Implementing Agencies usually iden- lines calling for stakeholder participation has been cne tified and raised such policy issues and activities with of the significant accomplishments of GEF 1. As a recipient countries, but in most cases, the identifica- result, GEF 1 project designs have included detailed tion was either too general or incomplete, and assur- xiv Smclv of GEF's Overall Performance ances from the government regarding the policy or The Implementing Agencies should providefor longer activities in question were either not forthcoming or project implementation periods-for examrple,five to seven were not specific enough. In four of the six cases, the years instead of three of five years-in cases in which Implementing Agency took steps that brought about project sponsors can show that extra time will be necessary some reduction of the risk. In the two others the to implement the project and demonstrate its viability for outcome is still unclear. In one case, the chances of futurefunders. project success were clearly undermined by a failure to take any follow-up action. IV. INSTITUTIONAL ISSUES Recommendations: The GEF project submission Mainstreaming of the global environment by format's description of project risks should callfor identifi- the Implementing Agencies: The study team devel- cation of specific policies and sectoral economic activities oped a separate set of criteria for evaluating the that could negatively affect project success, as well as the mainstreaming of the global environment in each of steps that need to be taken to reduce the risks to project the three Implementing Agencies. The study team successffrom those policies and activities. found that the World Bank has mainstreamed with regard to cofinancing of GEF projects. However, it The GEF should adopt a policy requiring that Imple- found that the Bank has not done as much in its inenting Agencies must obtain clear, formal commitments regular portfolio of projects in the biodiversity and from recipient countny governments regarding policies and climate focal areas as it might have; that it has not sectoral activities identified as increasing the risk of project taken steps to create the staff incentives necessary to failu re before proceeding with project implementation. put global environmental concerns on a par with tradi- tional bank business; that it has not systematically Financial sustainability of GEF projects: On integrated global environmental objectives into eco- the basis of an examination of the proposals for seven- nomic and sector work or into the Country Assistance teen projects in the countries it visited, the study team Strategies (CAS) process, and that it has not adequately found that serious financial planning for continuation addressed the impact on the global environment of its of project activities after completion of GEF funding financing of fossil fuel power development. FinaLly, the appears in less than half of the proposals. The study team found that the Bank has not yet undertaken team found that the sustainability of activities beyond programming based on global environmental objec- GEF funding of the project depends in part on the tives on any significant scale, although it appears to be project type. In near-commercial projects, poised to take an important step in that regard, by sustainability depends largely on their replicability by entering into a "Strategic Renewable Energy Partner- govemment or private investors, whereas noncommer- ship" with the GEF. cial biodiversity projects must be either self-financing through trust funds or obtain additional grant financ- The study team found that UNDP has increased ing from donors or the govemment itself. The experi- its cofinancing of GEF projects compared with a very ence of the Pilot Phase indicates that biodiversity low level in the Pilot Phase. The trend since 1995 has projects are more likely to have serious problems of been upward, although the team noted a significant financial sustainability than climate projects. proportion of this cofinancing is government funding that would have been spent in any case. The team Recommendations: The GEF Secretariat and found that UNDP has put in place a set of positive Implementing Agencies should require that project propos- incentives for work on GEF projects, although they do als contain a more thorough assessment of options for not appear to apply to the Latin American region. It achievingfinancial sustainability. found that UNDP does not track projects or compo- nents related to biodiversity conservation in its regular The GEF Secretariat and Implementing Agencies portfolio, and allowed renewable energy projects to should encourage the broader use of biodiversity trustfunds drop significantly in the 1994-97 period compared to help ensure thefunding of biodiversity projects in perpe- with the pre-GEF period. The latter trend was attribut- tuity. The Implementing Agencies should continue to seek a able primarily to UNDP's five year project cycle for high rate of leveraging of other sources of trustfund capital. 1992-96, wbich began in the early Pilot Phase of GEF, Executive Summary xv and UNDP has now taken steps aimed at reversing that that UNEP has shown some improvement in submit- trend in renewable energy in its regular portfolio. ting project proposals that are consistent with the prin- However, UNDP has not given similar emphasis to ciple of additionality to core program activities, but biodiversity. The team found that UNDP's lack of clar- that further progress is needed in this regard. ity about associated projects and its failure to main- stream the GEF systematically in preparing its Country Cooperation between GEF and the conven- Cooperation Frameworks (CCFs) during GEF 1 indi- tions: The study team found that the GEF has strictly cates institutional obstacles to mainstreaming. implemented the guidance of the conventions with due regard for the GEF's own mnandate and funding The study team assumes that UNEP has limitations and in a reasonably timely fashion. The mainstreamed the global environment in terms of giv- team found that guidance provided by the COP of the ing adequate attention to the four focal areas in its core CBD has been overly broad and would be more useful activities, but found that UNEP has not provided any if it focused on prioritization among ecosystems or staff incentives for work on GEF projects. It also found ecosystem types. The team also found that the GEF Priority Recommendation: Mainstreaming by the Implementing Agencies The World Bank should adopt public, measurable goals for the integration of global environmental objectives into its regular operations, including goals related to: 1) staff incentives, 2) funding level and/or number of GEF associated projects, 3) funding level and/or number of projects for the global environment in its regular lending portfolio, and 4) integration into its sector work and the Country Assistance Strategy (CAS) process. It should report regularly to GEF and to the public on its progress in achieving these objectives. The World Bank should begin a transitionfrom its role in financing conventional power loans to a new role in financing sustainable energy technologies. The World Bank should allocate increased financial resources to the Global Overlays program in order to ensure adequate staffingfor a substantially higher level of integration of global environment into sector work and the CAS process. The IFC should maintain a database of its projects with global environmental benefits, so that its mainstreaming of global environment can be assessed in thefuture. UNDP should establish a system of tracking projects and components that are relevant to the GEFfocal areas and set public, measurable targets related to: 1) funding levels and/or number of core-funded projects for biodiversity conservation, alternative energy and international waters, 2) funding level and/or number of GEF-associated projects, and 3) the Country Coopgeration Frameworks (CCFs). It should report regularly to GEF and to the public on its progress in achievng those targets. It should also consider making linkages between potential GEF projects and potential core budget projects an explicit objective of the process of preparing the Country Cooperation Frameworks. UNEP should devise a system of staff incentives, involving at least a revision of staff evaluation criteria, to give adequate consideration to GEF work. The GEF Secretariat and UNEP should devote more staff time and resources to upstream consultation not only in Washington but in Nairobi to ensure that all relevant UNEP program staff have adequate guidance in formulating GEF proposals. xvu Study of GEF' Overall Petforneance made a major adjustment in approval procedures for the GEF on the issue of the roles and responsibilities of enabling activities (EA), which resulted in a significant the Implementing Agencies and of the GEF Secretariat acceleration of approvals in 1996-97. The team also in reviewing projects for the work program, but that found that the EA program does not appear to have some issues could continue to be contentious in the been as effective in achieving its objectives regarding future. Both Implementing Agencies and the Secre- national communications and reports to the conven- tariat agree that the Secretariat has the responsibility to tions as had been anticipated. examine each proposal for incremental costs, eligibility and consistency with the Operational Strategy and Recommendations: The GEF should play a more long-term portfolio development. They both also agree proactive role in its relations with the conventions and that the Secretariat's review of project proposals has should, in consultation with Implementing Agencies, pre- often been overly detailed and focused on nonstrategic pare nmore detailed requests for guidance on those issues on issues. The Implementing Agencies believe that the which guidance would be most helpful. Secretariat has used its review of incremental costs to exceed its legitimate role. The team found, however, The GEF Secretariat, the Implementing Agencies, that the Secretariat's review of incremental costs does and the convention secretariats should undertake a com- on occasion require the assessment of issues that prehensive review of enabling activities before the end of would otherwise be considered the proper sphere of 1998 to detennine hIow successful the projects have been, the Implementing Agencies. analyze the reasonsfor those that havefailed, and consider- policy and programmatic responses to the pioblem. Mechanisms for coordination: The study team found that the mechanisms for coordination that have The Implementing Agency "monopoly" issue: evolved in GEF 1 have generally succeeded in raising Although the original understanding among the three the level of collaboration among Implementing Agen- Implementing Agencies was that each would have a cies. Joint pipeline reviews have reduced duplication distinct role in the GEF based on its comparative ad- and competition in projects. Focal area task forces vantage, the study team found that the roles assigned have already produced useful programming discus- to the World Bank and UNDP have become blurred sions in international waters, although the others have during GEF 1. The team found that increasing the only just begun to be used for such discussions. number of organizations which can propose projects directly to the GEF Secretariat could result in an in- The role of STAP: The study team found that crease in the number and types of viable GEF projects, STAP has played a useful role in helping to define the and that increased competition among Implementing Operational Strategy and Programs, and its roster of Agencies could help to reduce the transaction costs of experts was found to have been valuable to Imple- such a move. Although there could be some disadvan- menting Agencies in internal review of projects. How- tages to such a change, these disadvantages would ever, the team found that STAP was less successful in have to be weighed against the advantages. its selective review of projects. Its project review for the Secretariat-Implementing Agency consultations prior to entry into the work program has now been Priority Recommendation: discontinued. Implementing Agency Monopoly Recommendation: The Council should provide a The GEF Council should undertake a study new, more sharplyfocused mandatefor the STAP in light of of the advantages and disadvantages of vari- the change in the GEF's needs and the experience of STAP ous approaches to permitting additional or- during GEF 1. ganizations to propose GEF projects directly to the Secretariat and assume direct respon- V. GEF PROJECT CYCLE PROCEDURES sibility for GEF projects. Implementing Agencies' project cycles: Recipient countries complained to the study team about delays Work Program roles and responsibilities: The in the GEF project cycle, citing Implementing Agency team found that agreement has been reached within and GEF procedures, and disagreements between gov- Executive Summary xvii ernment and the agencies as causes. The study team the early phase of the GEF because of the lack of found that both the World Bank and tJNDP have made experience with Implementing Agencies, it has now some progress in shortening their phases of the project become routine that the GEF Secretariat checks on cycle - UNDP by combining the preparation of consistency of final project proposals with earlier project briefs and project documents and the World Council comments. Both the Implementing Agencies Bank by moving its submission of project briefs tup- and the Secretariat support the delegation of the func- stream. The longest stage of the project cycle, however, tion to the Secretariat, and such delegation would have involves project preparation by the recipient govern- significant savings in time and other costs to the GEF. ment and the Tmplementing Agencies. The team found that the benefit of shortening the World Bank's proj Ect cycle by allowing a range of incremental cost estimates Priority Recommendation: at the concept stage outweighs the benefit of requiring GEF Council Review a single incremental cost estimate at the project con- cept stage. The GEF Council should seriously consider del- egating the second review of project proposals to Recommendation: In order to encourage contin- the GEF Secretariat. ued adherence by the World Bank to its streamlined project cycle, the GEF Secretariat should allow the Irplementing Agencies to submit a range of estimates when a project' is VI. PROGRAMMING ISSUES first submitted, on the understanding that afirm estimate will be submittedforfinal approval. Overall programming issues: The team found that the allocation of resources among the four focal Incremental cost requirement: The study team areas has caused a shortfall within the International found that the present process of determining incre- Waters focal area that is likely to be exacerbated in the mental costs has excluded the participation of recipi- future. It further found that the GEF has effectively ent country officials in most cases, because of the lack balanced capacity building and investment activities in of undersLanding of the concept and methodologies. the GEF portfolio by combining both types of activities Although the new streamlined incremental cost proce- in the same project. dures are an improvement over the original, the study team doubts that they will be sufficient to persuade the Programming issues in the focal areas: In the majority of recipient country officials that they can and Biodiversity focal area, the issue of prioritization is should be involved in the process unless the GEF subject to significant political constraints, and there undertakes further efforts to engage them. are practical limitations to applying a programming strategy that is based on a scientific set of criteria. However, the team found that the GEF had not been Priority Recommendation: able to focus on ecosystems of greatest global impor- Incremental Costs tance to the extent that would be desirable. It further found that the GEF has not yet resolved some of the A working group representing the GEF Secre- conceptual and practical difficulties associated with tariat and the Implementing Agencies should, projects for sustainable use of biodiversity, and that in consultation with the convention secretariats, the dearth of published information on successful ex- develop simpler, more straightfonrard guid- periences in such projects is a major problem. In the ance and communication for recipient country Climate focal area, the team found that the present officials on the calculation of incremental costs emphasis on barrier removal is appropriate, but that and a strategyfor increasing their involvement more emphasis may be needed in the future on com- in the process of estimating those costs. bining near-commercial barrier-removal projects, and - longer term buy-down projects. This may require a rethinking of the present delineation of Operational GEF Council review of projects: The study Programs. In the International Waters focal area, the team found that, although the GEF Council's second team found that the approach to programming estab- review of project proposals may have been justified in lished a solid basis for international collaboration. The XX'ili Study of GEF' Overall Petformance approach to programming in the International Waters topics. They have served to articulate the GEF mission focal area has redirected GEF funding toward chal- and strategy, focus GEF investments, and improve the lenges that should have high priority and establishes management of GEF operations. Some recommenda- solid bases for international collaboration and national tions, however, have not been adopted or have been policymaking on cross-sectoral issues. The team also adopted only partially. The participants in the restruc- concluded that further initiative is needed in the con- turing of GEF decided not to follow the recommenda- taminant-based Operational Program on encouraging tion to broaden the range of Implementing Agencies the development of project proposals relating to re- beyond the existing three. And contrary to the recom- ducing developing countries' dependence on persis- mendation by the Pilot Phase evaluation, the GEF tent organic pollutants. Council decided to continue programming resources while the Operational Strategy was being drafted. With Recommendations: The GEF Council should au- regard to the recommendation on establishing a per- thorize the GEF Secretariat and Implementing Agencies, in manent monitoring and evaluation mechanism, a consultation wvith the Secretariat of the CBD, to undertake Council-approved monitoring and evaluation plan is a formal exercise to identify the ecosystems and ecosystem in the process of being implemented, based on shared types within each Operational Program in biodiversity that responsibility between the GEF Secretariat and the should be the highest prioritiesfor GEF in terms of a set of Implementing Agencies. The plan provides for both agreed criteria, including those specified in the Operational internal project monitoring and external independent Strategy. project evaluations. When more of its components, such as systematic inclusion of performance indica- The GEF Secretariat should compile iniformation on tors, are in place, assessments of overall project perfor- sttcccssful projects in sustainable usefrom NGOs and other mance can be made on a more objective basis. bilateral and multilateral agencies worldwide, and dis- seminate them to Implementing Agencies and recipient VIII. OVERALL CONCLUSION country Focal PoinEs. The study team concluded that the GEF has The application of incremental costs as a pro- generally performed effectively with regard to rapidly gramming tool: The study team found that the creating new institutional arrangements and ap- operationalization of the incremental cost concept as a proaches to programming its resources in the four programming tool has advanced markedly since 1995, focal areas. The GEF has also been relatively successful based on the degree of transparency and detail in in leveraging cofinancing for GEF projects and has had discussions of incremental costs in project documents. some positive impacts on policies and programs in Although cases of inflation of incremental cost esti- recipient countries. A significant accomplishment has mates may have occurred, the team found no evidence been the advisement of stakeholder participation in of a systematic tendency toward inflation of incremen- GEF projects. On the other hand, the Implementing tal cost estimates. The team believes that greater confi- Agencies have made little progress in mainstreaming dence can be placed in the final incremental cost the global environment, and the team believes that estimates for climate and ozone projects than for much more needs to be done in several areas, includ- biodiversity and international waters projects, because ing strengthening the Focal Point system, improving there is no single, commonly understood and widely the process of calculating incremental costs, better used methodology for calculating the incremental planning for the financial sustainability of projects, costs in the latter focal areas. shortening the project cycle, and raising awareness of the GEF and of global environmental issues. VII. FOLLOW UP TO THE PILOT PHASE EVALUATION The study team believes that the progress made in the brief period of GEF 1 and the potential for much The study team found that the GEF Secretariat greater success, particularly in mainstreaming, consti- and Council have taken action on most of the recom- tutes a basis for building a much stronger GEF in the mendations of the Pilot Phase evaluation. They have near future. The success of the GEF ultimately hinges, prepared GEF's Operational Strategy and Programs, of course, on political support in donor and recipient and other documents defining more clearly the project countries for mainstreaming global environmental cycle, incremental cost calculations and many other concerns into development. Introduction to the GEF I 1. INTRODUCT1ON TO THE GEF 1 The GEF is a financial mechanism that promctes cisions taken by the Assembly and Council translate international cooperation and fosters actions to protect into effective actions. It coordinates the formulation of the global environment. The grants and concessional the work program, oversees implementation, and en- funds disbursed complement traditional development sures that GEF's operational policies are followed. assistance by covering the additional costs (also known as "agreed incremental costs") incurred when a rna- 4. The GEF serves as the interim financial mecha- tional, regional, or global development project also nism for the Convention on Biological Diversity and targets global environmental objectives. the UN Framework Convention on Climate Change. In this regard, the GEF Council receives lormal guidance 2. The GEF was officially established in October from the Parties to the Conventions and is accountable 1991, for a three-year Pilot Phase. The GEF has de- to them. In its work related to intemational waters and fined four focal areas for its programs: biological diver- the phase out of ozone depleting substances, the GEF sity, climate change, international waters and is not accountable to a governing body of an intema- depletion of the Earth's ozone layer. Efforts to stem tional agreement. However, it does take into consider- land degradation as they relate to the above four fccal ation guiding principles from Agenda 21 of the United areas are also eligible for GEF funding. A total of 1. 16 Nations Conference on Environment and Develop- projects with GEF funding of $733 million were ap- ment, and relevant treaties such as the Montreal Proto- proved between 1991 and mid-1994. Based on experi- col. ence during the Pilot Phase, the GEF was restructured in 1994. Thirty-four nations, including 13 recipient 5. GEF's Implementing Agencies (IAs) are respon- countries, pledged $2 billion to the restructured GEF's sible for developing projects for GEF funding and core fund. With this funding, additional project alloca- implementing them through executing agencies in tions totaling $883 million were approved by the GEF specific countries and regions. The lAs are the United Council through June 30, 1997. A second replenish- Nations Development Program (UNDP), the United ment of the GEF is currently in process and is planned Nations Environment Program (UNEP), and the to be completed in early 1998. It will provide new World Bank. The World Bank also serves as GEF's funds for the 1998-2002 period. trustee. Each agency has created a GEF Coordination Unit in its headquarters office, led by an Executive 3. The governance, policy and implementation Coordinator. In addition, the GEF "family" includes a structure of the GEF are shown in Figure 1. The GEF Scientific and Technical Advisory Panel (STAP) of 12 Assembly, Council and Secretariat comprise the internationally-recognized experts. The STAP is an in- Facility's governance structure. The GEF Assembly, dependent advisory body that provides scientific and which meets every three years, consists of representa- technical guidance on GEF policies, operational strate- tives of all participating countries-currently number- gies and programs. The STAP maintains a Roster of iig 155-and is responsible for reviewing GEF's Experts, and all GEF projects must be reviewed by general policies. The GEF Council is the main govern- someone on this list. ing body. It is responsible for developing, adopting and evaluating operational policies and programs. The 6. Each country participating in the GEF has a Po- Council comprises representatives of 32 constituen- litical Focal Point. In addition, each recipient country cies-16 members from developing countries, 14 from has a GEF Operational Focal Point. The role of the developed countries and 2 from countries with transi- Political Focal Point is to serve as the contact point tional economies. It meets every six months. The GEF with the GEF Secretariat, within their country, and Secretariat services and reports to the Assembly and with other members of the constituency in which their Council. It is headed by a Chief Executive Officer country is included on issues related to governance. (CEO), who also serves as Chair of the Council. The The role of the Operational Focal Point is to identify Secretariat's responsibilities include ensuring that de- project ideas that meet country priorities and ensure 2 StLuy of GEF's Ove7-all Performance that GEF proposals are consistent with country priori- meets at least quarterly and includes representatives of ties and commitments under the global environmental the Secretariat, lAs and STAP. In addition, representa- conventions. The Operational Focal Points must en- tives from the biodiversity and climate change conven- dorse all project proposals for GEF in their countries. tions participate in the GEFOP. Focal area Task Forces in biodiversity, climate change and international wa- 7. GEF projects are executed in the field by a wide ters comprised of specialists from the Secretariat and variety of organizations, ranging from government lAs' GEF coordination units are fora for discussions of agencies, international organizations (e.g., the Food program and policy issues and for coordinating the and Agriculture Organization (FAO) of the UN and the pipelines of new projects within these focal areas. Fi- World Meteorological Organization), private sector in- nally. the GEF conducts an annual Project Implemen- stitutions, and international, national and local non- tation Review (PIR) to examine the status of GEF government and civil society organizations. Several projects that have been in implementation for at least a projects for which the World Bank is the GEF imple- year, and to identify lessons learned.' The PIR involves menting agency are executed by the International Fi- an internal review by each IA and an interagency re- nance Corporation (IFC) and the Inter-American view organized by GEF's Senior Monitoring and Evalu- Development Bank (IDB). ation Coordinator. 8. Non-governmental organizations (NGOs) play 10. The GEF funds three broad types of activities in an active role in the GEF at a variety of levels. There is its four focal areas. The vast majority of GEF resources a network of 16 NGO GEF regional Focal Points that are allocated to projects which are consistent with its serve as points of contact, information and coordina- Operational Strategy. The Operational Strategy reflects tion between national and local NGOs and the GEF. program guidance from the biodiversity and climate Immediately preceding each GEF Council meeting, a change conventions, and currently defines ten long- one-day consultation with NGO representatives takes term Operational Programs. Secondly, GEF finances place. NGOs also participate as observers in Council Enabling Activities in the biodiversity and climate meetings. In addition, many GEF projects are executed change areas to help countries identify their needs and wholly or in part by NGOs. prepare for projects which will help them meet their obligations to the biodiversity and climate change con- 9. A variety of coordination mechanisms have been ventions. Enabling Activities include compilation and developed within the GEF structure. The CEO meets assessment of existing country information, as well as annually with the heads of the Implementing Agencies, development of strategies and action plans. Finally, and more often with the Executive Coordinators in the GEF funds a limited number of short-term response lAs. The GEF Operations Committee (GEFOP) is the measures that do not fall within the parameters of forum through which members of the GEF family long-term programs or enabling activities, but are high regularly discuss major policy issues. The GEFOP priority and yield immediate benefits at low cost. 'For a report of the 1997 PIR, see Global Environment Facility, Project Impiemerttation Reviewv, 1997 (Washington, D.C.: January 1998). This report, as well as the report cf the results of the 1996 PIR, are available from the GEF Secretariat. Introduction to the GEF 3 FIGURE 1. GEF: INSTrruTIONAL STRUCTURE Conference of the Conference of the Parties: CBD Parties: FCCC CBD FCCC Secretariat Secretariat ........................ ... GEF Council GEF Assembly _ _ _ _ _ _GEF Charirnan/CEO and ......................... Secretariat NGO GEF Irnplem+nting Agencies Participation_ Participatond World Bank UNDP UNEP and Influence * ~~STAP GEF Focal Points esi. 300) Cooperating Countries (est. 160) .................... ...Advisory Reporting 4 SMudy of GEF's Overall Performance 11. PROVISION OF RESOURCES FOR THE GLOBAL ENVIRONMENT A. INTRODUCTION expenditures in 1992 covered some $6 billion a year for biodiversity conservation. On climate change, esti- 11. This chapter examines the performance of GEF mates of the costs of carbon emissions abatement have as a direct provider of grant and concessional resources varied widely, depending on the baseline assumptions and as an instrument for leveraging resources from adopted (such as GDP growth rate, rate of technologi- other donors, governments, and the private sector. cal change, and pricing regimes) and the reduction targets to be achieved.4 There is clearly great potential 12. After restructuring, GEF donor countries com- for measures that would result in short-term cost say- mitted $2 billion over four years to the first regular ings as well as carbon emission reductions. Overall funding period of GEF. Most donor countries hailed investment needs to realize carbon emission abate- the level of funding finally agreed to as a significant ment opportunities in developing countries are large.' achievement.2 Recipient countries and NGOs, how- Although these could produce considerable savings ever, considered the replenishment of GEF inadequate down the road, sometimes offsetting costs, various as well as a big step away from expectations that had political and institutional barriers prevent large-scale been raised at the Rio conference. investments in such activities. No aggregate cost esti- mates have been developed in the international waters 13. The best estimates of funding needs in the two focal area. key GEF focal areas show that the resources available today for global environmental activities in general and 14. GEF vas never intended to cover all the interna- for GEF in particular are small. Although such aggre- tional financing needs of global environmental pro- gate estimates are plagued by great uncertainties, they grams but rather to work in various ways as a catalyst indicate the magnitude of the challenge. The World for measures to address global environmental prob- Conservation Monitoring Centre, for example, finds lems. Given the limited resources available compared that the cost of conservation of critical biodiversity is with funding need estimates, GEF needs to program around $20 billion per year, based on extrapolations resources in ways that leverage additional resources as from estimates provided in United Nations Environ- much as possible from other sources. In this section, ment Programme (UNEP) Biodiversity Country Stud- the study team addresses three broad issues related to ies.3 Yet the center estimates that total national the role of GEF in providing resources: whether GEF 2 During the Rio Conference, both Germany and Prance, the initiators of the GEE Pilot-Phase, as well as some smaller European countries had advocated a substantial replenishment of GEF at around $3 billion. At the Participants Meeting in Beijing in May 1993, the working numbers for replenishment advanced by the GEF Secretariat after consultations with all donor countries were 2 to 3 billion SDR (Special Drawing Rights), which at that time corresponded to $2.8-$4.2 billion (GEF/RE.93/3, November 3, 1993). BirdLife tnternational, New and Additional Financial Resourcesfor Biodiversity Conservation in Developing Countries 1987-1994 (Cambridge, United Kingdom: 1996)-a study based on work carried out by the World Conservation Monitoring Centre, funded by the European Commission. ' Florentin Krause and others, Cutting Carbon Emissions: Burden or Benefit? (El Cerrito, Calif.: International Project for Sustainable Energy Paths, 19Y5). The Organisation for Economic Cooperation and Development (OECD) has also done considerable work on the overall economic effects of carbon taxes or emission quota allocations to different OECD countries. OECD, Global Warming, Economic Dimensions, and Policy Responses (Paris: 1995). 5 For example, carbon emission reduction investment reeds in India for an emission mitigation option that would not hurt the economy have been estimated at $135 billion for all economic sectors and $42 billion alone for afforestation (Asian Development Bank, Climate Change in Asia India [Manila, Philippines: 1994], p. 119). A study done by the Asian Development Bank for Indonesia puts the additional costs for only installing technologies to improve energy-efficiency in the transportation, industry, and electricity generation sectors, without requiring sacrifices in economic development, at $1 billion annually (Asian Development Bank, Climate Change in Asia: Indonesia [Manila, Philippines: 19941, p. 49). Provision of Resources for the Global Environment 5 has met the expectation that its funds would be new lates that resources for global environmental measures and additional to traditional development cooperation in developing countries should be provided above and resources, how significant GEF has been as a source of beyond those allocated to traditional development co- funding compared with other multilateral and bilateral operation and not at the expense of development assis- donors, and how successful GEF has been in leverag- tance. Intemational treaty language, however, does not ing additional financial resources from Implement:ing provide an operational definition of "new and addi- Agencies and other sources, which GEF participants tional" by, for example, defining a base year against and the GEF Council have considered a key strategic which official development assistance (ODA) and GEF objective. resource flows could be compared. Although develop- ing countries tend to consider 1992 "the year of the Rio B. ARE GEF RESOURCES NEW AND conference" as the base year, many donor countries ADDITIONAL? maintain that "new and additional" simply refers to funding efforts that go beyond the level of ODA re- 15. Paragraph 2 of the GEF Instrument adopted by sources that would have been allocated without the GEF participants in March 1994 specifies that GEF existence of GEF. "shall operate . . . as a mechanism for international cooperation for the purpose of providing new and 17. Only a definition of "new and additional fund- additional grant and concessional funding to meet the ing" that is based on the level of development assis- agreed incremental costs of measures to achieve agreed tance level in a base year can be operationalized to be global environmental benefits" in the four focal ar-eas used to determine whether donor countries have actu- of climate change, biological diversity, international ally met the obligation. A definition that requires the waters, and ozone layer depletion. The rationale for use of a counterfactual (what would have been the level industrial countries' commitment to provide new and of ODA in the absence of GEF?) cannot be used for that additional financial resources for global environmental purpose, because there is no objective basis for deter- measures is that they have a historic responsibility for mining if allocation of GEF resources in donor-country global environmental problems and better means to budgets has come at the cost of ODA resources. And it is pay for measures to address them. This principle is not clear what base year would be chosen for the pur- acknowledged in the Preamble of the 1992 Framework pose of comparison: Should it be 1991? 1992? Should Convention on Climate Change, which states the new and additional resources be calculated for each "common but differentiated responsibilities" of devel- successive GEF replenishment on the basis of the ODA oping and industrial countries, based on different his- level at the beginning of the replenishment? tories of consumption of natural resources and differences in their ability to pay for measures benefit- 18. A second difficulty in answering the question is ing the global environment.6 Similarly, the Convention the lack of clarity about what data should be used for on Biological Diversity acknowledges that "special pro- the base year and subsequent years. Should it be only vision is required to meet the needs of developing grant assistance? Grants and concessional loans? All countries, including the provision of new arid acldi- grant and grant-like flows? Nonconcessional loans? tional financial resources and appropriate access to The Official Development Assistance totals provided relevant technologies."7 Both conventions recogniize by the Organisation for Economic Cooperation and that economic and social development and poverty Development (OECD) Development Assistance Com- eradication are the first and overriding priorities of mittee (DAC) include a range of financial flows going developing countries. beyond grant assistance, including bilateral debt relief, bilateral loans, and contributions to multilateral insti- 16. "New and additional funding" is a political con- tutions, including the World Bank and multilateral cept, which leaves room for interpretation. Language development banks. However, it has never been estab- adopted by the climate change and biodiversity con- lished what should be included in the yardstick for ventions, the Rio Declaration and in Agenda 21 stipu- determining "new and additional." 6 Preamble to the United Nations Framework Convention on Climate Change. 7Preamble to the Convention on Biological Diversity 6 Sudv Qf GEF's Overall Performance 19. One way of- operationalizing the concept of "new additional" funds for GEF. The study team is simply and additional' as applied to GEF would be to take unable to answer the question without clearer guid- 1992 as the base year and compare the gross ODA ance from the GEF Council or another authoritative levels in successive years. The OECD DAC figures international body on operationalizing "new and addi- show a decline in the total from close to $61 billion in tional." Indeed, without such guidance, the concept is 1992 to a little more than $55 billion in 1996. Because doomed to remain one without practical meaning. DAC totals for ODA fluctuate significantly from year to year, the choice of base year would strongly affect the Recommendations answer to the "new and additional" question: the over- all ODA flow indicator fluctuates significantly from 23. The GEF Council should address the need for a year to year and, for example, reached close to $59 clear definition of "new and additional" financing for billion in 1995 before falling to $55 billion in fiscal the GEF, including the indicators that should be used 1996. Moreover, if only bilateral grants were counted, in measuring additionality. the trend would be shown to have gone up since 1992. 24. Donor countries should consider separating 20. More important, however, the study team also budget lines for global environmental measures in de- understands that DAC figures are unreliable and that veloping countries and for contributions to GEF from individual countries are known to underreport or budget lines for development cooperation. overreport resource flows because of both differential completeness in reporting and methodological differ- C. COMPARISON OF GEF FUNDING WITH ALL ences in tracking ODA expenditures.' The study team SOURCES Of FINANCING FOR THE GLOBAL cannot vouch for the accuracy of the figures, therefore, ENVIRONMENT even assuming that DAC statistics on ODA constitutes the correct indicator to be compared. 25. The study team attempted to analyze the signifi- 21. Another indicator of the additionalitv of re- cance of GEF funding in the context of overall financ- sources provided to GEF that could be applied at the ing in GEF's focal areas from all sources, bilateral and individual country level would be whether national multilateral. Although a fair amount of data is available budgetary allocation processes recognize GEF as dis- on the global environmental activities of various agen- tinct from regular development cooperation, that is, as cies, those data are often unreliable and cannot be a mechanism whose objective is the realization of glo- compared or aggregated due to differences in defini- bal benefits and not of national development benefits. tion or methodologies. Different agencies have differ- Although, in some donor countries, GEF resources ent definitions of what constitutes a biodiversity appear to have been allocated on top of and indepen- project or what exactly energy efficiency means. In dently from development assistance budgets, in others many cases, an agency's assistance on biodiversity or thev seem to have come out of an overall budget line renewable energy or international waters is aggregated for development cooperation. Where this happens, with nonglobal environmental and energy work. institutional barriers may be working against increased funding levels for GEF and global environmental mea- 26. The team tried to use OECD's DAC data base to sures. Mid-level government officials have no incentive obtain quantitative data on non-GEF assistance in the to push funding for global environmental purposes if four GEF focal areas. However, the DAC statistics are they fear that this will entail trimming other budget highly unreliable, because they rely on voluntary report- lines of the same ministry. ing by donor country agencies, which does not always occur or is incomplete. When the reporting does occur, Conclusions it is not reviewed for its accuracy or definitional consis- tency. Moreover, the team was also uncertain whether 22. All these definitional and methodological prob- bilateral contributions to GEF are aggregated with non- lems stand in the way of a clear answer to the question GEF spending in the data base, making comparisons of whether donor countries have provided "new and betwveen GEF and other sources impossible. ' Data from the DAC/OECD home page on the World Wide 'Web. Provision of Resources for the Global Environment 7 27. Given these difficulties, the team ultimately de- photovoltaics (PVs), energy-efficient lighting, and cided not to attempt to provide quantitative compari- biodiversity trust funds, which have attracted particu- sons of financing by GEF and other sources. Despite its lar interest from funding and financing institutions. inability to quantify total financing for the focal areas For example, the GEF Solar Home Systems Project in and, thus, the relative significance of GEF financing, Indonesia, if not derailed by the country's financial the team can make some broad observations about crisis, will facilitate the purchase and installation of financing for the global environment, based on inter- 200,000 solar photovoltaic systems in rural homes; at views, country visits, and professional experience. the same time, at least four other donors have separate projects that fund another 120,000-130,000 rural so- 28. Bilateral and multilateral agencies have increased lar home systems. Likewise, some of the energy-effi- their financing of global environmental activities in the cient lighting projects under preparation by the 1990s, including those in biodiversity, climate charige, International Finance Corporation (IFC) will operate and international waters. It is not clear whether 1,his through private sector intermediaries, possibly in the increase accelerated or slowed in response to the estab- same Central and East European countries in which lishment of GEF. But the increase has taken place even the European Bank for Reconstruction and Develop- while overall development assistance flows have de- ment has been establishing credit lines at commercial creased. Some donors have established programs and banks to help remove investment barriers to energy institutional units dedicated solely to energy efficiency efficiency, including energy-efficient lighting.10 or to biodiversity. Several areas have experienced par- ticularly notable increases in non-GEF support. For 31. These examples do not mean that GEF should example, there have been sharp increases in bilateral not support photovoltaics or other technologies sup- support for biodiversity trust funds from several do- ported by other donors. In the Indonesian case, for nors and rapid increases in support for renewable example, the GEF solar project is significantly different energy, particularly solar photovoltaics, by a number from the bilateral projects in that it is helping to estab- of bilateral agencies. Support for energy efficiency by lish a rural PV credit system. But these examples un- multilateral institutions has also greatly increased, par- derline the growing need for close coordination with ticularly in Central and Eastern Europe. other donors and the need to take stock regularly of how GEF projects compare with those of other donors. 29, The one focal area in which it seems clear that GEF is the largest funder is international waters, de- 32. In the area of biodiversity, although GEF is one fined as international collaborative efforts to reduce of a number of donors supporting the capitalization of threats to international waters at the regional or subre- trust funds, GEF's continued involvement helps attract gional level.9 Several multilateral agencies have funded additional donors. As others play an increasing role in projects for generating activities to reduce threats; to capitalizing the funds, GEF could shift its orientation international waters, primarily in the Mediterranean, toward bridge funding to cover the first year of a trust Baltic, Black, Caspian and Aral Seas, and the Danube, fund's operation or could provide just the technical Nile, and Mekong river basins but, unlike the GEF, assistance on establishment and operation of the they generally have not involved the same interna- funds. GEF's continued involvement is important, tional process of jointly evaluating threats and de.er- however, to ensure that at least part of the funds will mining priorities. go toward the global environment, not just the local environment. In this regard, one approach would be 30. As bilateral and multilateral assistance for glcbal for GEF to provide capital for a global window at an environmental activities increase, GEF may find itself environmental fund. This approach was used, for ex- increasingly funding projects similar to those of other ample, in the UNDP's Central American Fund for En- agencies. This issue appears most pertinent for solar vironment and Development. 9 Thus, the team does not consider investments in wastewater treatment or industrial pollution abatement as assistance for international waters, despite the fact that they have impacts on international waters, because they are made primarily for national economic development purposes. '0 Caspar Henderson, "EBRD Recaps Progress in Efficiency,' Clean Energy Finance (newsletter), Vol. 2, No. 1, Spring 1997, p. 4., http:// solstice .crest.org/efficiency/cef/index/html 8 Study of GEFs Overall Performance 33. The study team encountered many examples of Conclusions poor coordination among donor agencies in the coun- tries visited, leading the team to believe that the donor 39. Because reliable and comparable data were un- agencies are probably not well coordinated with GEF available, the study team could not determine the sig- or each other on planning and implementing financial nificance of GEF's funding for global environmental assistance related to climate change and biodiversity. activities relative to non-GEF sources of funding for There are exceptions to this generalization. An inter- those activities, although it found GEF to be the largest agency coordinating body has been formed on envi- funder in the area of international waters. The team ronmental trust funds, for example. In Central and also found that other institutions have significantly Eastern Europe, the London-based Project Preparation increased their funding in biodiversity and climate. Committee seeks to improve coordination between However, it found GEF's role in funding to be distinct donors and financial institutions in the field of envi- in several ways. Given the fact that complete informa- ronment investments. An Agenda 21 process in China tion on the activities of other financing agencies in a seeks to coordinate all donors on environmental activi- given country is frequently unavailable, the ties, and similar processes have started in Russia and additionality and distinct advantage of a GEF project Kenya, among other countries. But many countries do in that country may also sometimes be unclear. not have a mechanism for filling gaps and avoiding duplication in GEF's focal areas. Recommendations 34. Even though other donors are funding projects 40. GEF should regularly review and compare its that are similar to GEF projects in some manner, GEF own portfolio and project pipeline with those of other funding is different from bilateral or multilateral institutions to ensure that it is either providing signifi- funders or multilaterals in other ways. cant additional resources or demonstrating a compara- tive advantage over other institutions involved in the 35. First, GEF is able to program its resources on a same activities. In this regard, particular attention global basis with a minimum of influence on program- should be paid to GEF support for solar photovoltaics, ming decisions from political relationships. Other energy-efficient lighting, and biodiversity trust funds. multilateral and bilateral donors program their re- sources on a country-by-country basis; their decisions 41. GEF should work with OECD and other appro- are often heavily influenced by broader economic and priate international institutions to ensure that reliable, political considerations. comparable data on financing for measures to protect the global environment, including data on different 36. Second, GEF brings to projects a strong empha- types of projects, is compiled and made available to the sis on public involvement in initiation, design, and public. implementation. In some countries, this has opened up decisionmaking processes and, in others, brought D. LEVERAGING ADDITIONAL RESOURCES in more NGO involvement than multilateral lenders could have attracted. LEVERAGING THROUGH COFINANCING AND ASSOCIATED PROJECTS 37. Third, GEF's more rigorous approval process means that countries must think through and justify 42. Since the beginning of the Pilot Phase, GEF has GEF projects in greater detail than for most other put great emphasis on leveraging additional financing donors. This appears to result in better projects, al- to enhance its impact on the four focal areas. Recogniz- though it also makes the approval process longer and ing that the funds available from OEF itself are small in more complex. relation to the needs, the GEF Council, GEF Secre- tariat, and Implementing Agencies have all agreed on 38. Fourth, GEF's association with the three Imple- the objective of using GEF grants to leverage financing menting Agencies gives it greater institutional capacity from other sources. for project preparation and implementation, including impact on policy, than other donors. Provision of Resourcesfor the Global Environment 9 43. The study team was asked to evaluate the success fills the gap between the 'business as usual" baseline of GEF's efforts to mobilize financing from all sources. scenario and a "sustainable development" baseline sce- The team focused on leveraging through cofinancing nario. It asserted that without the financing of a certain of GEF projects by Implementing Agencies, either by minimum set of sustainable development activities, spending money from their own core operational re- including those focused on health and poverty, it is sources or by bringing in additional financing from often impossible to implement the incremental cost other donors or the private sector to cover part of the activities of a GEF project. Therefore, according to costs of a GEF project. UNDP, the financing of such baseline activities should be counted as leveraging by GEF. 44. As of June 30, 1997, GEF had committed $861 million to regular projects during GEF 1. Based on 48. The team believes, however, that this broader figures provided by the Implementing Agencies on definition of leveraging would be misleading. It would cofinancing of GEF projects, the team found that -he mean that financing activities that are clearly in the aggregate total of cofinancing during GEF 1 is just national development interest of a country and that under $2.2 billion. This represents a ratio of 2.5 addi- have no effect or only the most indirect effect on the tional dollars to one GEF dollar during GEF 1. global environment would be regarded as a GEF ac- complishment. In short, the distinction between na- 45. During the Pilot Phase, GEF invested $733 mil- tional development objectives and global environmental lion in regular projects and the Implementing Agencies objectives would be completely lost. It is the study provided or mobilized $2.24 billion in cofinancing- team's understanding that GEF was established based almost exactly the same amount as in GEF 1. This on the importance of maintaining that distinction. amount represented three additional dollars for every dollar provided by GEF. The comparison is somewhat 49. Based on the study team's definition of leverag- misleading, however, considering that one pilot ing, project documents submitted by the Implement- project accounted for $1.3 billion in cofinancing. For ing Agencies were analyzed for a sample of eighteen this reason, the study team found that GEF has on full GEF projects, representing all the projects ap- balance been more successful in mobilizing proved for the GEF work program during the calendar cofinancing during GEF 1 than during the Pilot Phase. year of 1997 on which project documentation was Furthermore, the team found the aggregate cofinancing available at the time of the study. The contributions by to represent a significant degree of leveraging of addi- recipient govemments and other funding entities to tional funding-and activities for global environmental these projects that were listed as cofinancing either in benefit-by making GEF grants available. the GEF Quarterly Operational Report (QOR) or in an Implementing Agency's own summary of cofinancing 46. Cofinancing by Implementing Agencies, other totaled $774.2 million, of which $276.4 million was donors, or the private sector is not always the same as from recipient governments. leveraging financial resources for global environmental benefit, however. No definition of leveraging has been 50. The study team analyzed the figures for govern- provided by the GEF Council or Secretariat, so the ment cofinancing and for total non-GEF contributions term has been used in different ways by Implementing to project financing for each project, based on data in Agencies and the secretariat. The study team defined the project document regarding the activities being leveraged financing as financing in conjunction witlh a financed. It counted these financial contributions as GEF project that supports activities producing global leveraging only if the funding was to generate global environmental benefit and that would not have been environmental benefit and would not have been spent spent in the absence of the GEF project or that would in the absence of the GEF project or if the GEF project otherwise have been spent in ways that would have caused the government to spend the same amount but contributed to global environmental degradation. in ways that had global environmental benefit. 47. The study team recognizes that this is not the 51. The results of this analysis are shown in Table 1. only way that leveraging can be defined. In discussions The study team found that in five of the eighteen with the team, UNDP argued that leveraging should be projects, most or all of the cofinancing listed in GEF defined to include cofinancing for a GEF project thiat documents represented actual leveraging and that gov- 10 SLtud- of GEF's Overall Perfcrmance TABLE 1. COFINANCING AND ACTUAL LEVERAGING IN A SAMPLE OF EIGHTEEN GEF PROJECTS (MILLIONS OF U.S. DOLLARS) Cofinancing as Leveraging as Project GEF Funding Used in the QOR Strictly Defined By Project By Project Government Total Government Total 1. India Coal-Bed Methane 9.19 6.80 8.10 6.80 8.10 2. Uruguay Banados del Este Biosphere Reserve 2.50 1.50 1.54 0.00 0.36 3. Bolivia Energy-Based Rural Electrification 4.45 1.60 4.05 1.60 4.05 4. China Capacity Building for Rapid Commercialization 8.80 8.90 18.84 8.5-18.84 5. China Energy Conservation 22.00 44.00 180.00 7.00 70.00 6. Indonesia Coral Reef Rehab. and Management 12.00 13.00 48.00 1.50 3.20 7. Uganda Protected Areas Manage- ment and Sustainable Use 10.00 9.30 96.80 0.00 26.00 8. Sri Lanka Medicinal Plants 4.57 20.72 20.72 .50 .50 9. Romania Integrated Protected Areas 5.00 1.60 1.60 0.00 0.00 10. Pakistan Protected Areas Management 10.80 15.70 15.70 0.00 0.00 11. Aral Sea Basin 12.00 12.00 47.50 0.00 18.30 12. Brazil Biomass Power Commercial Demo 40.00 82.00 82.00 13. Reducing Biodiversity Loss at Cross Border Sites in East Africa 12.65 1.70 5.77 1.20 5.27 14. Conservation of Wetlands and Coastal Ecosystems in Med. 13.27 22.70 28.60 0.00 2.30 15. Brazil Energy Efficiency 20.00 100.00 177.00 0.00 3.00 16. Eritrea Conservation Management 4.99 ? 10.80* 0.00 0.00 17. Argentina Patagonia 5.20 2 13.90* 0.00 0.00 18. Czech Republic Kyiof Waste Heat 5.09 4.00 14.00 4.00 14.00 Total 203.00 276.00 775.00 23.00 246-256 Claimed as cofinancing in UNDP cofinancing data sheet but not in QOR. Provision of Resourcesfor the Globcl Environment 11 ernment spending involved substitutional activities veraged $1.3 billion through substitutional activity, benefiting the global environment." In three other accounts for a large proportion of all leveraging in the cases, the amount of GEF-leveraged financing was Pilot Phase and GEF 1. found to be significant but less than half of what was claimed.'2 In one case, leveraging was significant, but 54. Nevertheless, based on this analysis of a sample the project document reflected genuine uncertainty of projects, the study team concludes that the amount about whether the government funding for renewable of financial leveraging, defined in a strict sense, is energy activities would have been devoted to the activi- significantly smaller than the total cofinancing based ties supported by the project in the absence of the GEF on the QOR and Implementing Agency data. project, so a range of estimates for total leveraging was used.13 In the other nine cases, the project documents 55. The main mechanism for leveraging additional indicated clearly that a high proportion of the funding in resources for GEF has been World Bank loans associ- question was for baseline activities and, in the case of ated with GEF projects. The GEF Council and Secre- govemment spending, that most or all of it would have tariat have expressed a strong preference for World been spent on the activities in the project in any case.'4 Bank GEF projects that are associated with non-GEF projects over "freestanding" World Bank GEF projects 52. Total cofinancing found to be genuinely lever- (which have no Bank loan financing) to increase the aged in the eighteen projects in the sample is estimated leveraging of GEF's limited resources. By linking a GEF as $246-$256 million, which represents about one- grant with a World Bank loan, GOF has hoped that the third of the $775 million in cofinancing as identified in Bank could persuade client governments to borrow for the QOR or in Implementing Agency documentation. projects that would provide global environmental ben- The amount of government financing in this sample of efits. However, whether World Bank loans associated projects that was found to be genuinely leveraged was with GEF projects have provided financing for activi- $23 million, representing 8 percent of the S276 nil- ties that are both additional and benefit the global lion listed as cofinancing. environment has been the subject of some debate since GEF began. 53. The study team cannot provide a quantitative estimate of overall leveraging based on the analysis of 56. Most of the funding for the World Bank's associ- the sample. A few projects with real leveraging can ated loans (84 percent of the total since the beginning make up for many projects in which such leveraging is of the Pilot Phase) has been in the climate change focal absent. One-third of the leveraging in this sample of area. The study team analyzed the portfolio of eight eighteen projects is accounted for by the Brazil Biomn- World Bank-associated loans in the climate change ass Power Demonstration project. And the Philippines focal area during GEF 1 as of mid-1997'5 and seven Geothermal Project during the Pilot Phase, which le- during the Pilot Phase'6 to determine the extent to "I India Coal-Bed Methane, Bolivia Energy-Based Rural Electrification, Reducing Biodiversity Loss at Cross-Border Sites in East Africa, Brazil Biomass Power Commercial Demonstration, and Czech Republic Kyjov Waste Heat. 12 China Energy Efficiency, Uganda Protected Areas Managerment and Sustainable Development, and Aral Sea Basin projects. The China Energy Efficiency project proposal claims $41-$91 million in domestic bank loans as part of the financing plan, despite the fact that the funding would only be available for commercialization cf tec -nologies in the event that applications of the energy services company concept prove successful during the pilot program. The figure given in the Quarterly Operational Report forjune 1997 for the China Energy Conservation Project apparently assumes $55 million in commercial bank loans for that purpose. The study team concluded that such financing should not be considered as cofinancing because there: is no commitment by the founders and because proj ect managers have no control over the decision to finance. It should be considered, however, as leveraging through replication. 1' China Capacity Building for Rapid Commercialization. 14 In the case of Indonesia Coral Reef Rehabilitation and Management, the World Bank indicated that the project involves substitutional activities for government baseline spending on the site chosen for global biodiversity importance, which represents a relatively small percentage of its contribution to the project. 1" The eight projects in the portfolio of GEF I are: Brazil Bicmass Commercial Demonstration, China Energy Conservation, Indonesia Renewable Energy Small Private Power, Indonesia Solar Home Systems, Latvia Solid Waste Management and Landfill Gas Recovery, Lithuania Klaipeda Geothermal Demonstration, Senegal Sustainable and Participatory Energy Management, and Sri Lanka Energy Services Delivery The study team considered only the demand management and fuel substitution component of the Senegal project as its climate portion, because the rest of the project involves sustainable management of a protected area and is considered to be in the biodiversity focal area. 16 The five Pilot-Phase projects on which information could be obtained were China Sichuan Gas Transmission and Distribution Rehabilitation, India Alternative Energy, Phi.ippine Leyte-Luzon Geothermal, Poland Coal-to-Gas, and Russian Federation Greenhouse Gas Reduction. The study team was unable to contact the task mansgers for the other two Pilot-Phase, GEF-associated climate loans. 12 Study of GEF's Overall Performance which these loans represent genuine leveraging by without the GEF grant and would have provided the GEF. The key issue in this examination was whether biodiversity protection of the GEF-associated loan the Bank would have made a very similar loan to the project. In that case, the loan grew out of a World Bank country in question in the absence of the GEF grant. Forestry Sector Review in Argentina and the GEF grant The team was able to interview the task managers of six was considered incidental to the project. of the nine associated loans for GEF 1 climate projects and the task managers of five of seven Pilot Phase 61. In some instances, GEF was the key to the associated loans with regard to this question. project being developed at all; in most cases, the avail- ability of the GEF grant was necessary to the loans 57. Five of the six task managers of GEF 1 projects focus on conservation of biodiversity in sites of global interviewed indicated that the associated loan would importance. The India Ecodevelopment Project origi- not have been made without the GEF grant being nated from the Indian government's exercise in creat- available. In only one case-the demand management ing a project especially for GEF, and the International and fuel substitution component of the Senegal Sus- Development Association (IDA) contribution resulted tainable and Participatory Energy Management Loan- from the project becoming too big for GEF to fund. did the task manager say that the loan would have Similarly, the Lake Victoria Environmental Manage- been made regardless of GEF's involvement in the ment project would not have happened without GEF project. Thus, the team found that associated loans in funding: it began entirely as a GEF project, but because the climate focal area generally did leverage additional the cost was greater than GEF could fund by itself, IDA global environmental funding during GEF 1. was asked to match the GEF grant. The Second Mada- gascar Environmental Program Support project is a 58. The examination of the Bank's Pilot Phase, GEF- multidonor operation, the design of which was based associated loans for climate projects, however, showed on a process of analysis funded by GEF; it is not clear that two (Philippine Leyte-Luzon Geothermal and In- whether the loan would have proceeded at all without dia Altemative Energy) would definitely not have gone the presence of a GEF grant. forward in the absence of the GEF grant, one would definitely have proceeded, another would probably 62. Tn the other cases, the World Bank would have have gone ahead, and, in one case, the task manager made a loan with some similarities to the GEF associ- remained uncertain. ated loan, but it would not have protected biodiversity at all or would not have done so as effectively as the 59. The study team also examined all eight of the associated loan. In the case of the Pilot Phase Lao Bank's loans for biodiversity associated with GEF People's Democratic Republic Wildlife and Protected biodiversity grants through the Pilot Phase and the two Area Conservation Project, the Bank would not have GEF-associated loans for biodiversity approved during made a loan to support a protected area system in Laos the Pilot Phase (Lao People's Democratic Republic without GEF, although it would have gone ahead with Wildlife and Protected Area Conservation and a traditional forest management loan. In the case of the Biodiversity Conservation in Southeast Zimbabwe) to Kerinci Seblat Integrated Conservation and Develop- determine the extent to which they represent genuine ment Project, the World Bank would have made a loan leveraging of financing for global environmental ben- for development projects in the Kerinci Seblat area re- efits. Interviews were conducted with the task manag- gardless of GEF's existence, but the projects would not ers of all eight of these World Bank-associated loan have been focused on protecting biodiversity, because projects to find out whether GEF was crucial to the the Indonesian Ministry of Forestry has a policy of not biodiversity conservation benefits provided by these borrowing, especially for biodiversity conservation loans. Again, the team asked the task managers whether the World Bank would have made the loans in 63. Similarly, in the case of the Indonesia Coral Reef the absence of a GEF grant and, if so, whether the loan Rehabilitation and Management (COREMAP) project, projects would have been designed to protect the Bank probably would have moved ahead on a coral biodiversity as were the actual GEF-associated loans. reef project without GEF, but it would not have in- cluded sites of global importance. In all the other 60. In only one of the eight associated loans-the projects, the GEF loan was viewed as crucial to suc- Argentina Biodiversity Conservation Project-did the cessful biodiversity protection. Without the GEF task manager believe the loan would have been made grant, there would have been no ring of communities Provision of Resourcesfor the Global Environment 13 committed to sustainable forest management sir- complement GEF's portfolio. However, the potential rounding the national park in the Senegal Sustainable for leveraging inherent in this association was not real- and Participatory Energy Management Project. In the ized during GEF 1. Only two non-GEF UNDP projects case of the Honduras Biodiversity in Priority Areas in the GEF focal area were associated with GEF Project, without the GEF grant, the Bank loan would projects. The study team believes that it represents a not have been based on a set of priority biodiversity major untapped resource for leveraging in support of conservation sites or on the broad participation of GEF objectives, which should be a key objective in the nongovernment stakeholders. And without the GEF next phase of GEF. grant, the Zimbabwe Conservation in Southeast Zim- babwe Project would not have had the policy dialogue 67. Apart from resources that GEF leverages through between the World Bank and the government in 1994- cofinancing, GEF may also leverage additional funding 96, which made possible key institutional and policy for complementary activities through demonstration reforms that were vital to the success of the project in and replication. Many projects in the climate focal area saving biodiversity. anticipate that successful completion of their activities will demonstrate to other funders that the technology 64. The evidence indicates that during GEF 1, GEF in question is commercially viable and will lead to has leveraged global environmental benefits that replication. In at least one case, the China Coal-Bed would not otherwise have occurred in eight of nine Methane Project, the project has already successfully World Bank-associated loans that cofinanced GEF demonstrated technologies for reducing methane biodiversity projects and five of six associated loans emissions and recovery of methane as a fuel in three that cofinanced GEF climate projects. sites, resulting in several agreements for joint ventures for investment in similar projects in the future.'7 65. The study team also found evidence that the use of an associated Bank loan to leverage financing for a 68. Other projects have been designed in the expec- GEF project can have disadvantages for the GEF tation of such replication by the private sector. The project. When a country agrees to a GEF-associated India Coal-Bed Methane Project is expected by project Bank loan, some government agencies may also push sponsors to attract private sector investments in the for more activities in the project to generate foreign technology. And in the case of the China Energy Con- exchange with which to repay the loan. For examyle, servation Project, if the energy service companies sup- the World Bank staff in Indonesia reported that more ported by the project are successful, domestic Chinese such activities had to be included in the Kerinci Seblat banks and the World Bank are ready to commit a total project at the insistence of the Home Affairs Ministry, of $100-$155 million to commercialization. with the result that fewer funds were available for park protection. Second, the associated loan may be caught 69. Although evidence from a few individual cases in domestic politics, causing long delays in start-up. indicates that additional funding for the global envi- The main cause of delay in the Egypt Red Sea Coastal ronment should be generated by GEF projects through and Marine Resource Management project, for in- replication, the study team was unable to do a system- stance, was that the World Bank loan was opposed by atic analysis of the likelihood that GEF projects, par- the Egyptian parliament. In addition, some countries ticularly in the climate focal area, will be replicated. that are highly indebted are likely to be reluctant to take out loans for conservation in the foreseeable fu- 70. The strong emphasis placed by GEF on leverag- ture. Although the associated loan must remain the ing is legitimate, given the relatively small size of the main mechanism for leveraging additional resources fund and the fact that it is one of the few quantitative for the global environment, the study team believes measures available for judging GEF success. The team GEF must be aware of the problems it poses in certain believes, however, that there is a danger in placing too circumstances. much emphasis on leveraging of financial resources by GEF projects as a measure of success. An overemphasis 66. UNDP has the advantage of being able to associ- on total financial resources mobilized may distort pro- ate GEF grants with its own grants, which could create gramming decisions by tilting them in the direction of a strong incentive for greater emphasis on projects that projects that have the largest amount of cofinancing. 17 GEF, Project Implementation Review 1997, gp. cit., p. 15. 14 Study of GEFs Ove-cill Performance Although they are important, such totals are not an LEVERAGING PRIVATE SECTOR INVESTMENT accurate indicator of the impact of individual projects or of the GEF portfolio as a whole. 75. The study team recognized that the mobilization of private capital for the global environment is a special Conclusions concern for GEF. Indeed, the private sector has an increasingly important role in providinlg investment 71. GEF has succeeded in using grants to mobilize capital to developing countries, taking on much of the resources on a significant scale, and its performance in role traditionally played by multilateral development GEF 1 has been superior, on balance, to its perfor- banks. Private debt capital inflows into emerging mar- mance in the Pilot Phase. The study team found that a ket countries, which amounted to just $26 billion in high proportion of World Bank-associated loans that 1984 (in 1996 dollars) had increased to $88.6 billion have cofinanced GEF projects have actually leveraged by 1996. Foreign direct investment into emerging additional resources for global environmnental benefit market countries during this tillie jurmped from $9.4 and those loans have been the primary mechanism by billion to $109.5 billion.'8 Although this investment is which financing has been leveraging by GEF. How- focused primarily on fewer than a dozen nations, these ever, it found that associated GEF projects with such are countries that are important to GEF's mandate of loans may carry some disadvantages in certain circum- maximizing global environmental benefits. stances. It also concluded that UNDP-associated grants represent a large, untapped potential for such 76. Increased financial flows can place more pressure leveraging. on natural resources and the environment. But they also hold out enormous opportunity for raising the amount 72. Using a rigorous definition of leveraging, the of private sector investment in GEF projects. GEF's study team found that the actual leveraging of resources success in this regard has been growing but remains for the global environment has been substantialLy less small in comparison to the opportunity. Private sector than the overall totals for cofinancing mobilized by the financing has taken place or is expected to take place in Implementing Agencies. The study team found, how- forty-five GEF projects, including both Pilot Phase and ever, that there is a danger in emphasizing leveraging GEF 1. Of these, twenty-two are under way or nearly too much as a measure of GEF's success. It should be under way (see Table 2 below).'9 Ten are in the ozone considered along wvith a number of other relevant insti- depletion focal area, ten are in climate change, and two tutional and programmatic indicators. projects involve both climate change and biodiversity. There are no reported instances of intemational waters Recommendations projects leveraging private investment. 73. The GEF should adopt a rigorous definition of 77. Total private investment in these twenty-two 'leveraging" that includes only funding that is addi- projects is $1.12 billion, but more than half of this tional to existing funding patterns and that is expected ($754 million) is accounted for by the Philippines to create global environmental benefits. It should ap- geothermal project. Also, the total probably overstates ply this definition in the Quarterly Operational Report true private investment because in some cases, such as and other relevant GEF documents. Implementing China, India, and the Russian Federation, the invest- Agencies should apply this more rigorous definition in ments are coming from state or quasi-state enterprises, their own databases and reports on cofinancing of GEF not the private sector. A more conservative estimate, projects. subtracting these projects as well as the ozone projects (because recipient country investment in them is man- 74. When there is sufficient experience with imple- datory) yields a figure of $910.5 million for total pri- mentation of GEF projects, the GEF's Senior Monitor- vate sector commitments to date in GEF projects. ing and Evaluation Coordinator should commission a Without the Philippines geothermal project accounts, study of the replicability of projects in the GEE portfo- the total is just $156.5 million. lio. 18 Global Finance (September 1997), p. 184. "9Jamison Suter, World Bank, personal communication, September 1997. Provision of Resourcesfor the Global Environmnent 15 TABLE 2. WORLD BANK GEF PROJECrS WITH PRIVATE SECTOR COMMITMENTS Est. Amount Leveraged (Millions Country Project/Concept Name Funding Equity Name of U.S. Dollars) Global Small- and Medium-Scale Enterprise Small-scale private Program (pilot phase) enterprises 2.90 Global Small- and Medium-Scale Enterprise Small- and medium-scale Program (replenishment) enterprises 3.50 Belarus Phaseout of Ozone-Depleting Substances Local enterprises 8.80 Brazil Biomass Power Commercial Demonstration Sponsor's equity 29.00 Bulgaria Ozone-Depleting Substances Phaseout Recipient enterprises 3.00 China Efficient Industrial Boilers Local private sector 68.60 Czech Republic Kyjov Waste Heat Utilization TEPLARNA Kyiov 10.00 Czech Republic Pkaseout of Ozone-Depleting Substances Recipient enterprises 1.80 Hungary Phaseout of Ozone-Depleting Substances Recipient enterprises 1.50 India Alternate Energy TNPL and developers 44.00 Indonesia Solar Home Systems Local participants 72.30 Philippines Leyte-Luzon Geothermal Private contractor 620.40 Philippines Leyte-Luzon Geothermal Private contractor 133.90 Poland Energy-Efficient Lighting Recipient enterprises 1.60 Poland Phaseout of Ozone-Depleting Substances Local enterprises 14.00 Russian Ozone-Depleting Substance Federation Consumption Phaseout (first tranc0e) Recipient enterprises 12.70 Russian Phaseout of Ozone-Depleting Substances Federation (second tranche) Recipient enterprises 21.50 Slovak Republic Ozone-Depleting Substances Reduction Recipient enterprises 2.50 Slovenia Phaseout of Ozone-Depleting Substances Recipient enterprises 3.50 Sri Lanka Energy Services Delivery Private sector 23.30 Tunisia Solar Water Heating Private sector 13.60 Ukraine Phaseout of Ozone-Depleting Substances Local industries 32.20 78. In nearly all cases of private investment in GEF of such institutions will follow if project sponsors can projects, the private sector party involved is the benefi- generate well-designed, profitable projects. But to se- ciary or sponsor of the project, such as the enterprise cure their investment capital, it may be necessary to that is converting to non-ozone-depleting equipment include them in the up-front identification and develop- or the developer of alternative energy projects. There ment of projects with high perceived risks. are few instances in which GEF projects seek to leverage private financial institutions, such as commercial banks, 79. The study team could identify just five instances insurance companies, pension funds, and other institu- in which such third-party investors are playing (or tional investment funds. In some cases, the involvement soon will play) a key financial role in GEF projects. 16 Study of GEFs Overall Performance First, IFC's Renewable Energy and Energy Efficiency outside review of private sector GEF proposals may Fund is intended to attract roughly $175 million from need to be restricted. private sources for its initial capitalization. The private managers of the fund have committed a portion of the 82. Another procedural issue has to do with the capital. The rest must still be raised. Second, IFC's concept of incremental costs. In many cases, it may Terra Capital Biodiversity Fund is intended to attract not be these costs that are the barrier to commercial roughly S40 million in private investment for its capi- investment but the level of risk compared with talization. Third, IFC's Hungary Energy Efficiency projects normally financed. Under such circum- Cofinancing Project uses GEF funds in the form of a stances, the appropriate GEF role would be to help guarantee to reduce the credit risk to private domestic reduce the risk through such actions as providing a financial institutions. Fourth, the World Bank's Indo- partial guarantee, paying for some of the up-front nesia Solar Home System Project will involve four local transaction costs, or taking a range of other risk- commercial banks that will provide lines of credit to reduction steps rather than subsidizing the size of the solar equipment dealers, who in turn will provide firm's investment. Allowing Implementing Agencies to credits to solar system buyers. Initially, the banks will calculate the "incremental risk" as a way of determin- use mainly World Bank funds, but after project ing the size of the GEF grant could help target GEF completion, it is anticipated that they will use their grants more efficiently on removing the barriers to own funds. Fifth, the IFC's Small- and Medium-Scale private sector participation. The GEF Secretariat has Enterprise Fund operates through private financial in- reportedly shown considerable flexibility during the termediaries, some of whom may ultimately lend their last year on this issue.20 own funds in addition to administering the on-lending of GEF funds. 83. Most private sector involvement in GEF is through the World Bank, although IFC is playing an 80. In the ten countries visited by the team, there increasingly important role. The IFC reports that as of was little active participation by the private sector in December 1997, $69.3 million worth of IFC-spon- GEF projects beyond providing procured equipment sored GEF projects were under way and $68.7 million and services or, in some cases, acting in an advisory in the near-term pipeline.2' IFC's GEF strategy is to capacity. Despite the frequently expressed desire by focus on near-commercial projects and those that are Focal Point ministries and other government officials commercial but highly risky to maximize the leverag- to include the private sector, there appears to be little ing of GEF funding and avoid using GEF in the form tangible effort on their part to do so. In some cases, of grants. For example, IFC has provided GEF assis- those host country individuals involved in GEF do not tance in the form of concessional loans and loan guar- know how to involve the private sector. In other cases, antees. The Energy Efficiency Cofinancing Project in there is a reluctance to do so out of concern that GEF Hungary is the only instance of GEF funds being might simply end up subsidizing private companies. provided in the form of a guarantee. Providing GEF There are also a number of policy and regulatory barri- assistance in the form of loan guarantees has the dual ers to increased private sector involvement. benefit of attracting private lenders to global environ- ment projects and allowing the GEF loan guarantee 81. According to Implementing Agency staff, one of funds to be reused for another project (or expansion of the main barriers to private sector involvement is the the original project) if they are not called on to cover long GEF approval process. Given the uncertainty, financial losses. risk, and high opportunity cost inherent in a GEF project, private firms do not have sufficient incentive 84. To date, IFC has spent few of its own funds to to wait two or more years for approval. Streamlining cofinance GEF projects, but this will change, since it this process for private sector projects has been fre- has already approved funds for cocapitalizing the Re- quently suggested. Implementing agency staff also newable Energy and Energy Efficiency Fund and the note that when proprietary information is involved, Terra Capital Biodiversity Fund at $35 million and $5 2 Louis Boorstin and Dana Younger, IFC, personal communication, December 1997. 21 Ibid. Provision of Resourcesfor the Global Environment 17 million, respectively. IFC staff report that they are aLso a leveraging standpoint. However, the lack of opera- actively looking for opportunities to use existing IEC tional experience to date, due in part to long start-up credit lines for global environmental purposes. For delays for some of the funds, has meant the team could example, one proposed project involves the use of GEF not evaluate the funds' effectiveness. funds to leverage an existing IFC credit line in Argen- tine commercial banks for improving the energy ef-fi- 87. The team found that major barriers to increasing ciency of street-lighting. support from the private sector exist, particularly GEF's long and complex approval procedure and the 85. In April 1996, the GEF Council reviewed a paper comparatively greater risk of global environmental prepared by the secretariat on increasing private sector projects compared with normal commercial projects. involvement in GEF.22 Although the council did rot However, the team notes that GEF assistance can be take any action based on the paper, there was a ccn- provided to the private sector in a way that does not sensus that increased private sector involvement was subsidize private profits but instead reduces the risks desirable. One of the paper's major recommendations to private firms and financial intermediaries of com- was that nongrant financing, such as concessional mitting capital to projects with global environmental loans and equity investments, should be pursued for benefits. Such assistance can involve a variety of fi- providing GEF support to private sector projects. New nancing mechanisms, including instruments which ways of attracting private investment to GEF projects have below market returns (e.g. low interest rate loans) are currently being explored by the secretariat. One and/or contingent payment features (e.g. partial guar- approach under consideration is the broader use of antees which are forgivable if a project fails). GEF funds in the form of loan guarantees, as in IFC's Energy Efficiency Cofinancing Project in Hungary. An- Recommendations other approach being examined is the establishment of a special environmental loan guarantee fund at the 88. The GEF Secretariat and Implementing Agencies Multilateral Investment Guarantee Agency, the risk should engage business and banking associations and insurance agency in the World Bank Group. mobilize financing from individual private financial sector companies, such as banks, insurance compa- Conclusions nies, and pension funds. To interest the private sector in GEF projects, the GEF should use the "incremental 86. The study team found that GEF has been able to risks" of a potential private sector GEF project as a way mobilize a small but growing level of private sector of determining the size of the GEF grant. financing of GEF projects. It has been particulaily successful at mobilizing funds from the direct bene:fi- 89. GEF should identify and apply techniques for ciaries of projects but has had comparatively little reducing the risk of the private investors of participat- success with mainstream private financial institutions. ing in GEF projects, such as using GEF funds to pro- The use of GEF funds to establish environmental in- vide loan guarantees. vestment funds shows great promise, particularly from 22 Global Environ-nental Facility, Draft "GEF Strategy for Engaging the Private Sector," GEF/C.7/12, March 7, 1996. 18 Studv of GEFs Overall Performance 111. ISSUES AT THE CouNTRY LEVEL A. THE FOCAL POINT SYSTEM IN RECIPIENT 93. Table 3 provides an overview of the different COUNTRIES approaches to coordination in the ten countries vis- ited. It shows that most of the countries have not yet 90. There are two types of GEF Focal Points-politi- established any formal body for intragovernmentat co- cal (usually the country's representative on the GEF ordination of activities related to the coordination of Council, if the nation is a member) and operational GEF activities. (usually the ministry that provides financial and tech- nical overview of GEF projects). The study team found * Interagency mechanisms for project screening and that the effectiveness and level of engagement of the pipeline development. In Russia, the Inter-Agency Operational Focal Point are likely to be greater if the Committee and state commissions together provide country is a GEF Council member. Nine of the ten interagency coordination with regard to GEF projects. countries visited by the core team during the study have In Mexico, coordination takes place through the political Focal Points who are council members. Al- National Council for Sustainable Development. In though council members have minimal staff and re- China, this coordination function is carried out by a sources, most appear to have established effective panel of technical experts, which examines projects working relationships with the Operational Focal Point. for technical soundness and fit with national criteria and priorities. In Kenya, the National Review Panel 91. According to the procedural steps in the GEF provides this coordination, but it is a relatively new project cycle,2 the Focal Point is responsible for "a) mechanism and, therefore, premature to assess its acting as the principal contact point for all GEF activi- impact. In India and Egypt, the Ministry of Environ- ties within the country, (b) reviewing project ideas and ment and Forests and the Egyptian Environmental concepts, endorsing their consistency with respect to Affairs Agency, respectively, convene meetings of the the national programs and the country's participation ministries relevant to GEF projects as the need arises. in conventions and confirming their national priori- In Poland, a formal coordinating mechanism is still ties, (c) facilitating broad as well as project-related in the process of being created. Some Focal Points consultations with stakeholders, (d) providing feed- consider that GEF projects have such small funding back on GEF activities." An effective GEF Focal Point that they' do not warrant any special coordination can also help to develop the country's GEF pipeline by effort. idenLifying sound project ideas and can promote un- derstanding of and interest in GEF by disseminating * Policy coordination with Focal Points for the con- information among government and nongovemmental ventions. Frequent divergence between positions stakeholders. toward GEF taken by recipient countries in the GEF Council, on one hand, and in one of the conven- 92. The study team found significant variations tions, on the other, reflects poor policy coordination among the countries visited in terms of the Opera- among government agencies. In most of the coun- tional Focal Point undertaking these roles. Most Focal tries visited, there were no institutionalized mecha- Points are undertaking some form of coordination of nisms for formal interaction between the GEF Focal GEF-related activities at least within the government. Point and the Focal Points (national secretariats) for But most of the coordinating mechanisms are more the conventions. This is true even in those countries informal. Some play a lead role in the development of in which the GEF Focal Points are housed within GEF projects. Others believe they are circumvented by the same ministry as the convention Focal Points. In more powerful agencies, such as the Ministry of Fi- Zimbabwe, the Ministry of Environment serves both nance. as the GEF and biodiversity convention Focal Points. 2` Global Environment Facility. The GEF Project Cycle, (Washington, D.C.: March 1996), p. 4. TABLE 3. DESCRIPriON OF GEF FOCAL POINT SYSTEMS IN TEN COUNTRIES Operational Focal Point (Financial and Technical Aspects of Functions of Operational Mechanism for Intra- Country Political Focal Point In-country GEF Activities) Focal Point government Coordination Brazil Secretaria de Asuntos Internacionais SEAIN, although it appears that the Ministry of Disseminates GEF information, analyzes and reviews GTAP (Grupo Trabalho de Analisis de Projetos) (SEAIN) (Secretariat for Internationcl Planning and Budget, Foreign Loans Division, proiects, conducts technical analyses of GEF policies Affairs) plays a role too. an projects. China Ministry of Finance Ministry of Finance (World Bank Department) for Monitors GEF activities and collaborates with other Ad hoc panel of technical experts provides (World Bank Department) financial aspects with technical support from the relevant government offices responsible for GEF focal advice on an as-needed basis to vet technical National Environmental Protection Agency (NEPA) areas, such as NEPA Office of the Convention on soundness of GEF projects and fit with national Biological Diversity (CBD), the focal point for the CBD. criteria and priorities. Develops GEF project pipeline. Egypt Egyptian Environmental EEAA Convenes interministerial meetings for review Ad hoc interministerial meetings choired Affairs Agency IEEAA) of GEF projects and other GEF issues. by the focal point. inriia Ministry of Finance, Department Ministry of Environment and Forests (MOEF) Conducts technical review of projects, coordinates MOEF plans to establish a GEF "cell" of Economic Affairs (DEAl with other ministries, and convenes interagency within MOEF. meetings to review and approve projects. Ministry of Finance (DEA) gives final approval and clearance. Indonesia Planning Ministry (BAPPENAS) Planning Ministry and Ministry of Finance, with Unclear which functions are performed by Operational No mechanism for collaboration or to ensure technical support from Ministry of Environment Focal Point. BAPPENAS keeps and updates a central that Ministry of Environment's technical input is 'blue book" of all funding proposals and sends always sought for all proposals. approved projects to Ministry of Finance. Kenya Ministry of Finance Ministry of Environment and Natural Resources, Reviews all project proposals, follows up on projects, Thirty-eight-member National Review Panel, National Environment Secretariat (NES) and houses the coordinating offices of the two GEF consisting of government agencies, NGOs, enabling activities in biodiversity and climate change. Implementing Agencies, and the private sector. Also lioises with the Inter-Ministerial Committee on Its mandate is to review all proposols to ensure Environment, Subcommittees on Biodiversity and that they meet GEF criteria and are country Climate Change. driven. Mexico Ministry of Finance and The National Council for Sustainable Coordinates GEF activities. Ministry of Finance and Public Credit (Directorate Public Credit Development of International Financial Organisms) Poland Ministry of Foreign Affairs Ministry of Foreign Affairs Monitors GEF activities and disseminates information There were some indications that limited size of on GEF activities and Council policies. GEF funds does not warrant special coordination efforts, however, a formal coordination mechanism is now being developed and is in a 'process of advanced development." Russia State Committee for State Committee for Environmental Protection Coordinates GEF projects in Russia. Strong centralized system, Inter-Agency Environmental Protection Committee and State Commissions. Zimbabwe Ministry of Tourism, Environment Ministry of Tourism, Environment, and Mines Coordinates GEF projects in Zimbabwe. Ad hoc interministerial steering committees are and Mines (Department of Environment) established on a project-by-project basis. 20 Study of GEFs Overall Performance In China, the National Environmental Protection disposal, they could not do an adequate job of coordi- Agency serves as the Focal Point for the biodiversity nation. The Egyptian Focal Point believed that he had convention but also plays an active role (as technical to provide some small incentive, such as lunch or Focal Point for GEF) in many GEF matters in col- travel expenses, for other agencies to attend inter- laboration with the Ministry of Foreign Affairs. agency meetings. Some Focal Points have made no attempt to secure funds from national budgets on the 94. The team identified several problems encoun- grounds that they are acting as Focal Points for GEF tered by at least some Focal Points in the ten countries more than for their governments. This was particularly visited. First, there is a lack of clarity on the mandate, the case for the political Focal Points, whose representa- terms of reference, and functions. In one country, tional responsibilities sometimes extend beyond their there was even some confusion as to which agency is countries to a group of countries within the region. the Focal Point. Although this points mainly to inter- nal coordination weaknesses of a recipient govern- 97. Thelackofbroadconsultation withanddissemi- ment, further clarity in the role of the Focal Point nation of information to stakeholders is a problem relative to other government agencies (including with some Focal Points. Due to its strong government parastatals and government-funded research and sci- focus, GEF information emanating from the Focal entific institutions), Implementing Agency country of- Point sometimes remains within a close-knit group of fices, and institutions preparing proposals would government agencies. In Indonesia, for example, the enhance the effectiveness of the Focal Point system. study team found that many government organizations and research institutes do not know what types of 95. A second problem concerned institutional and proposals are eligible for GEF funding. It appears that budgetary constraints. Five of the ten Operational Fo- the Russian Federation Focal Point has not included cal Points in the countries visited were located in the some relevant government agencies in its consulta- environment ministry or agency. However, there is tions. In Egypt, NGOs said they were not being con- some evidence that worldwide, a much higher propor- sulted. In Brazil, interested NGOs complain that the tion of Operational Focal Points are located in environ- Focal Point will not accept proposals from them. ment ministries 24 That situation appears to present special problems for Focal Point coordination, because 98. The final problem identified by the study team of the relative weakness of environment ministries. concerned the limited availability of language-specific This weakness stems from the low priority accorded to information about GEF. Focal points need easy-to- the environment in most recipient countries compared understand information to help them with their infor- with ministries dealing with economic affairs. Environ- mation dissemination responsibilities, and those ment units usually have no statutory powers to coordi- interviewed expressed the strong desire for such mate- nate other ministries and lack sufficient political rials. In Russia and Egypt, however, the team found no influence to get other ministries to respond. In India, official GEF information available in local languages, the Ministry of Environment and Forests (MOEF) and the country study in Viet Nam reported that only complained that, in the past, a number of biodiversity the GEF Project Cycle document was available in Viet- projects had gone to the Ministry of Finance's Depart- namese. ment of Economic Affairs (the political Focal Point) without consulting MOEF. In Egypt, the Environmen- 99. The GEF Secretariat and the Implementing tal Affairs Agency indicated that other ministries had Agencies have been aware of problems and shortcom- been unresponsive to its requests as Focal Point for ings in the Focal Point system and have taken some attendance at meetings or feedback. steps intended to redress them. Since 1996, the Imple- menting Agencies have collaborated in carrying out a 96. The lack of budgetary resources for GEF func- series of project development workshops designed to tions exacerbates the problem. Some Focal Points provide govemment officials, NGOs, and project staff noted that without some budgetary resources at their with training and basic information on project devel- 24 According to a 1996 UNEP document, 62 percent of the sixty Operational Focal Points that had been designated up to that point were located in environmental ministries (United Nations Environment Programme, 'Enabling Activity Proposal for PDF Block B Grant' (August 31, 1996), p. 2.) Issues at the Country Level 21 opment and design. As of mid-1997, forty-one such B. THE REQUIREMENT FOR PRoJEcTs To BE workshops had been held or were planned either in COUNTRY DRIVEN individual countries or in regions. UNDP is planning to translate a "beginner's guide to GEF" into multiple 104. The requirement for GEF projects to be "country languages. driven" is a paramount principle in GEF legislative, strategic, and operational documents. The GEF Instru- 100. However, the experiences of the ten countries ment states that projects must be "country driven and visited indicate that GEF efforts to strengthen the Focal based on national priorities designed to support sus- Point system need to be more carefully targeted. An tainable development, as identified within the context evaluation of the Project Development Workshops by of national programs." the three Implementing Agencies in 1997 suggested that the current version of the workshops may need 105. The study team examined two key questions: substantial revision and that Operational Focal Points what constitutes a "country-driven project" and what might be asked to manage the workshops. The work- is its impact on country ownership of a project as shops could also focus much more centrally on prob- defined as the level of commitment to and support for lems of coordination, both on projects and policy and a project on the part of the recipient country's govern- on stakeholder involvement. ment and nongovernmental stakeholders? Although it is desirable for projects to be country driven, it is Conclusions country ownership that is a prerequisite for the success and long-term sustainability of a project. 101. The study team found that the GEF Focal Pcint system is not yet adequately institutionalized in some COUNTRY-DRIVEN PROJECTS countries. Some Focal Points have not yet set up stand- ing coordinating mechanisms for interactions with 106. In the absence of a GEF definition of a project other ministries, country representatives to the con- being country driven, the study team considered two ventions, or NGO stakeholders. Some are not clear on possible indicators that a project is country driven: their roles, and others are unable to carry them out Focal Point endorsement of a project and the degree of adequately because of internal weaknesses, such as i:he recipient country involvement in project development unwillingness of powerful ministries to cooperate A and management. common weakness is the tendency to limit information to a relatively narrow circle of govemment stakeholders. 107. Country Focal Point endorsement of a project is required by GEF as evidence that it is country driven. Recommendations It does not appear, however, to be a reliable indicator of its being country driven. Such an endorsement pro- 102. In order to enable Operational Focal Points to be vides no evidence of the inclusiveness of the process more effective advocates for GEF issues in their coun- and the involvement of other government, private sec- try, the GEF Secretariat and Implementing Agencies tor, and civil society stakeholders. Some country Focal should broaden the existing Project Development Points are attempting to include a broad range of Workshop format by involving the Operational Focal stakeholders in their decisionmaking processes by es- Points as much as possible in planning and execution tablishing multistakeholder coordination mechanisms, and by focusing more on the coordination and infoDr- but others have not yet done so. mation dissemination functions of the Operational Fo- cal Points. 108. The degree of recipient country involvement in project development and management is a more reli- 103. The GEF should provide resources for transla- able indicator of the degree to which a project is coun- tion of basic GEF documents into the local languages try driven. Therefore, the team focused on how of those countries requiring such translated docu- projects were initiated, designed, and managed as an ments. indication of how strongly they are country driven. 109. Three different patterns of country involvement in project development were found. In the first, project proposals clearly originated in the recipient countries 22 Study of GEF's Overall Performance and reflected predominant recipient country influ- terested in developing solar energy to carry out rural ence. The India Ecodevelopment Project was an Indian electrification in areas off the main grid, so GEF cli- creation and design, although the scale of the project mate-related projects are a relatively high priority. The was strongly influenced by World Bank advice. Simi- Indonesia Solar Homes Project fits into the countrv's larly, in the India Alternate Energy Project, design and policy to install one million solar homes within the preparation were undertaken primarily by the Ministry next nine years. So, even though the project may not of Non-Conventional Energy Sources and the Indian be country driven, the team found that the project has Renewable Energy Development Authority. In Mexico, country ownership. the Protected Areas Program was said by Mexican officials to be designed primarily by national agencies, 112. Some projects that have tittle recipient govern- although major differences with the World Bank ment input, however, enjoy much less support. Due to emerged in the development process. Thus, these their international nature, regional and global projects projects are highly country driven, even though Imple- require that the Implementing Agencies play an impor- menting Agencies also played major roles in their de- tant catalytic role, these projects are usually endorsed velopment. Stakeholders in these cases consider that at the request of that agency. If the outputs are not the projects to have strong country-level support. considered a high priority in a country's national inter- ests, ownership and commitment may be low. One 110. A second pattern was one in which the Imple- example is the regional, climate change enabling activ- menting Agency came up with the initial idea and ity in Kenya, Building Capacity in Sub-Saharan Africa played a large or even dominant role in development to Respond to the U.N. FCCC (Framework Conven- but with significant input from the recipient govern- tion on Climate Change). According to most ment. The Biodiversity Conservation in Southeast interviewees, the project was prepared by a multina- Zimbabwe Project, for example, was initiated by the tional team of energy and climate specialists and is World Bank (to be associated with its Wildlife Manage- executed by an NGO based in Senegal. Kenya, Zimba- ment and Environmental Conservation project). The bwe, and Ghana are involved in the project. In Kenya, Viet Nam Protected Areas for Resources Conservation concerns were expressed about lukewarm commit- Project was brought to the State Planning Committee ment because of the limited role played by the recipi- by UNDP, wvhich provided most of the impetus for its ent country. UNDP is working with Kenya to redress design. In the Philippines and Jordan, the Implement- misunderstandings and to ensure full buy-in by all ing Agencies initially advanced the suggestion for GEF stakeholders. biodiversity projects to the government agencies and were the main force in designing them. The Lake 113. Regional projects involving private sector part- Victoria Environmental Management Project involving nerships may encounter similar problems because they Kenya, Tanzania, and Uganda was also initiated and are often initiated by the Implementing Agencies in primarily designed by the World Bank. These projects collaboration with private entities. The Photovoltaic are much less country driven than those in the first Market Transformation Initiative implemented by IFC category. They can, however, still enjoy government in India, Kenya, and Morocco have raised concerns in and nongovernmental stakeholder support to the ex- India and Kenya about the low level of involvement by tent government agencies and other relevant stake- government stakeholders in project development. holders believe that they have been adequately Although IFC consulted with and informed the gov- involved in the process. ernments about the initiative in both cases, the team heard complaints in both countries that some officials 111. In the third pattern, projects are initiated by the first found out about national participation in the Implementing Agency and have little recipient country project when an IFC consultant visited the country. involvement in design and development. For example, These complaints suggest that either inadequate consul- according to Tndonesian officials, all of Indonesia's tation with recipient country stakeholders by the Imple- climate projects were initiated primarily by the World menting Agencies or inadequate intragovernmental Bank and developed with little government input. Al- coordination can undermine country ownership of a though the government did not play an active role in project. project design or development, it is possible for them to have strong country support if they are closely 114. These examples show that country ownership of linked to existing government policy. Indonesia is in- projects does not necessarily depend on initiation or Issues at the Countrv Level 23 development of a project by the recipient governmznt. which foreign consultants are required. UNDP indi- Rather, it depends on the degree of participation by cated in its comments on an earlier draft of this report government and nongovernmental stakeholders in its that it does not use international consultants so heavily development and the degree of coincidence with the in Latin America and the Caribbean as in other regions. country's interests. 118. According to the Implementing Agencies, all 115. Recipient countries differ in the degree to which project decisions (including hiring of consultants) are they have an interest in GEF focal areas. When a the responsibility of recipient governments. The team, country views a focal area as a priority in its environ- however, encountered instances in which international mental or development strategy, GEF projects are consultants played an unwelcome role in the prepara- likely to gain more commitment and ownership. On tion and implementation phases, leading to conflicts the other hand, some countries are not interested in between Implementing Agency and recipient country establishing a strategy for mitigating climate change, to stakeholders. The team was unable to corroborate the cite one focal area. Under those circumstances, coun- allegations made about the international consultants in try ownership of a climate change project is likely to be all cases. It did take note, however, of the general weak unless the project is linked to an important dissatisfaction regarding the use of foreign consultants, national need. The draft 1997 Project Implementation based on some general perceptions about them: Review (PIR) of GEF lists a number of projects in which national ownership has been enhanced by the * They are expensive (compared with local experts) coincidence of project goals and national needs, such and drain project resources. as providing economic/livelihood benefits, creating a * They are not as knowledgeable about culture-spe- forum for influencing the environment policy frame- cific issues, political sensitivities, and idiosyncrasies work, or enhancing mine safety. that might warrant particular approaches. * They compromise a project's sustainability because 116. Although the Implementing Agencies have im- at the end of the assignment they take away with proved their efforts to use national and subregional them the expertise and knowledge acquired. experts at all stages of the project cycle, there contin- * Reliance on short-term consultants on project-spe- ues to be dissatisfaction in developing countries with cific assignments provides no means of capturing the reliance on foreign consultants. In all countries their collective expertise for future projects or for visited, the team found that the use of foreign cons-ult- consistency and continuity. ants in some instances has reduced government and local participation in projects at the design phase. The 119. These concerns are compounded by the lack of issue came up in relation to at least one project in each mechanisms or procedures to document country-level country visited. In the India Ecodevelopment Project, project experiences for future use. Some of the GEF for example, the government insisted that the World project preparation activities involve cutting-edge or Bank not involve foreign consultants at the design precedent-setting approaches, especially on incremen- phase of the project. In Egypt, 20 percent of the funds tal costs and stakeholder participation. GEF's project- for the Lake Manzala Engineered Wetlands Project had related expertise and experience reside in the already been spent on foreign consultants before Implementing Agencies. Although this is a strength of project implementation. the system, cost-effective ways of documenting con- sultants' experiences need to be identified so that these 117. Foreign consultants are often necessary in areas are integrated into lessons on which all members of the in which domestic expertise is lacking-for example, GEF family can draw. These could be integrated into projects involving novel concepts and technologies. the PIR process as part of a set of best practices in the The study team did not find evidence of concerted field to be used on a continuous basis to inform project efforts to team local and foreign experts to present design and development. opportunities to build and strengthen local capacities in such situations. Implementing agencies relied on Conclusions foreign consultants for the calculation of incremental costs in nearly all the countries visited by the study 120. The team found that country-driven projects and team. There may be some variations among Imple- country ownership are related but not synonymous. A menting Agencies and among regions in the extent to project may not be country driven in origin, but it can 24 Study of GEFs Overall Performance ultimately enjoy country ownership if recipient coun- donors, and international environmental NGOs. In try stakeholders play a role in its development and this crowded field, the incremental impact of GEF is execution or if it is viewed as coinciding with country difficult to identify. Therefore, the team identified in- needs. "Country driven" should be seen as a dynamic dicators of direct GEF impact on public awareness rather than a static concept. More GEF projects will relating to knowledge about GEF and to knowledge become more country driven with time as recipient about global environmental issues. governments initiate more project concepts and be- come more involved in project design and preparation. INDICATORS OF KNOWLEDGE OF GEF 121. The team found that a number of projects have 126. The study team looked for evidence of the visibit- achieved country ownership, even when the role of ity of GEF and an understanding of how it works. It national stakeholders in the initial project design was found that GEF has extremely low visibility in some limited, because the country finds the project valuable. countries. In Indonesia and India, the team was told It also found that a minority of projects, including a that most people do not distinguish between the number of global and regional projects, have enjoyed World Bank and GEF. In Poland, those who have limited recipient commitment but that these concerns heard of GEF are likely to view it as an adjunct of the can be addressed by strengthening the Focal Point World Bank. Even when GEF projects attract media system. attention, as in Belize, the project is associated with the Implementing Agency. GEF is least well known within 122. Although foreign consultants may be necessary the private sector. The head of the Chamber of Com- in many instances (and in some cases, a mix of local merce of India indicated that there is little awareness of and foreign consultants may be the best approach), the GEF within Indian industry, for example, and he was reliance by Implementing Agencies on foreign experts unaware that GEF funded private sector projects. instead of on national and subregional expertise has come under criticism, because it tends to reduce the 127. The level of understanding of GEF varies among local involvement necessary for country-driven different constituencies. Even country officials who are projects and country ownership. concerned with GEF-related activities, such as Agenda 21 and global environmental conventions, are not fa- Recommendations miliar with GEF criteria or how to access GEF re- sources. Those who are involved with GEF activities 123. The GEF Council should adopt a policy, parallel- and have some basic knowledge about GEF as a source ing that for stakeholder participation, aimed at pro- of external funds often lack understanding of the fund- moting the greater use of local and regional ing criteria in the focal areas. GEF was described in one consultants in projects; encouraging an appropriate instance as a "Washington-based black box." There is mix of local and foreign experts in GEF projects; and even less understanding of GEF among nongovem- securing greater recipient-govemment participation in mental stakeholders. In Egypt, the small grants coordi- the screening, short-listing, and selection of project nator, the general coordinator of the Egyptian steering consultants. committee, and a group of fifteen NGOs with whom the team met all agreed that NGOs are generally unin- C. CONTRIBUTioN OF GEF TO AWARENESS OF formed about GEF. In India, an NGO representative GLOBAL ENVIRONMENTAL ISSUES said that the NGO sector is "completely GEF-illiterate." In some cases, even field-level staff of the Implement- 124. The study team assessed GEF's contribution to ing Agencies were not fully briefed about GEF. increased awareness of global environmental issues. In some countries the low level of awareness of global 128. In sharp contrast, the GEF Small Grants environmental issues means that any knowledge of the Programme (SGP) has relatively high visibility among GEF focal areas, even from a narrow local perspective, NGOs. In most countries with SGPs, NGOs and other represents an increase in awareness. stakeholders could associate it with a local coordina- tor. Most of these coordinators are effectively inte- 125. The major difficulty in making such an assess- grated into the NGO, United Nations, and donor ment, however, is that many other players are involved coIIIIImunities. In Kenya, Poland, and Zimbabwe, for in GEF's focal areas, including U.N. agencies. bilateral example, SGP offices have established effective work- Issues at the Counytr Level 25 ing relationships with the players in both regular envi- 133. The study team collected a few examples of cases ronmental activities as well as with GEF 1 projects in of media coverage either directly or indirectly inspired anticipation of the scale-up of some SGPs. by GEF projects. In Egypt, the coordinator of the GEF climate enabling activity convinced newspapers to 129. The team found at least two major factors con- carry a number of articles on climate change for a tributing to the low level of awareness and understand- period of weeks-a first in local coverage. In its 1997 ing of GEF. First, current GEF information does not PIR, UNDP reports that two projects (in Belize and reach all of GEF's diverse constituencies. GEF's main Papua New Guinea) have stimulated policy debates in contacts in most countries are the Focal Points, usually the media. In Viet Nam, during the six months prior to the Ministries of Finance, Environment, or both. They the team's visit, some 200 articles on biodiversity were receive considerable amounts of information from the published in local newspapers at least partly as a result GEF Secretariat, but, in some cases, make no system- of the GEF-funded Biodiversity Action Plan. atic effort to ensure that this information is dissemi- nated to the relevant stakeholders. Furthermore, 134. Some GEF projects generate considerable de- several countries commented about the highly techni- bate-negative or positive-about GEF's focal areas. cal nature of GEF documentation and the fact that it During its early preparatory phase, the Tana River was not available in the local language. Primate Reserve project in Kenya generated debate on public participation and sustainable use projects in 130. Second, those who know about GEF appear to Kenya, whereas the Photovoltaics for Households have few incentives to promote it. In many countries, Project in Zimbabwe has elevated local knowledge particularly the larger ones visited by the study team, about solar energy as an option. Another project con- GEF is one of many donors and viewed as a small find taining components that have attracted considerable with complex rules and procedures. Some Focal Points media interest is the designation of the Belize Barrier claimed that they were reluctant to encourage govern- Reef as a World Heritage Site in the Belize Sustainable ment agencies to submit proposals because of the Development and Management of Biologically Diverse lengthy development and approval process. Even Coastal Resources Project. within the Implementing Agencies' country offices, the incentives to disseminate information about GEF be- 135. GEF enabling activities have contributed to the yond the key ministries with which they work are development of networks of constituencies on global weak. In some cases, field-level staff are not well environmental issues (among academic research and trained or briefed on GEF programming and criteria. NGO communities). On both climate change and Some Implementing Agency staff identify GEF as a biodiversity, there is evidence that growing networks potential funding source but the complex project cycle of interest groups that have been involved in enabling exacts a high price in terms of time, raising the need for activities now exist and may continue their involve- extreme commitment in promoting a project, other- ment. GEF in Egypt has created a large network of up wise it would not get far. to 500 institutions and professionals involved in the climate change area, according to the project manager. 131. In recognition of the low level of awareness and The Viet Nam country study reported that three years understanding of GEF at the country level, GEF estab- of work preparing the GEF-funded Biodiversity Action lished the Communications Working Group. In mid- Plan had created a network of government staff, local 1996, the group reached agreement on the division of consultants, academics, and others working on responsibilities for raising awareness about GEF and biodiversity conservation. The constituencies for global environment issues. It is now developing an biodiversity conservation include more than one thou- overall GEF communications strategy. sand forest staff trained for one month in biodiversity conservation, many of whom had never heard of INDICATORS OF AWARENESS OF GLOBAL ENVIRONMENT biodiversity or global environmental problems before. ISSUES Conclusions 132. Indicators of GEF's impact on awareness of global environmental problems include GEF-inspired media 136. These examples of GEF impacts on public aware- coverage of global environmental issues and the devel- ness from ccuntry studies lead the study team to con- opment of networks on global environmental concerns. clude that, at least in certain countries, GEF has had 26 StLdY of GEFs Overall Peiformance some impact on awareness of global environmental 141. GEF defines stakeholders as the "individuals, issues. These impacts are obviously small in relation to groups, or institutions that have an interest or stake in the problem as a whole, although they sometimes the outcome of a GEF-financed project," including involve strategically important constituencies. governments, Implementing Agencies, and executing agencies. Although this definition does not mention 137. GEF is not well known or understood in recipi- NGOs, they make up one of the most prominent ent countries, because of lack of incentives for Imple- groups of stakeholders in GEF activities. NGOs range menting Agencies and Focal Points to promote it and from policy advocacy groups operating at the interna- the absence of a well-targeted communication and tional or national level to grassroots institutions and outreach strategy. groups operating at an intermediate level, serving as spokespersons on behalf of communities in the rural Recommendations areas. Some groups focus on technical issues, includ- ing research and academic institutions and "think 138. The GEF Council should authorize and ad- tanks," whose input can be important in some highly ecuately fund the development of a GEF outreach and technical projects. Some NGOs operate indepen- communications strategy that targets GEF's multiple dently; others, such as those in some economies in constituencies, including the Focal Points and relevant transition, are partially funded by state budgets. The government agencies, NGOs and civil society, the me- team found that GEF projects have worked with the dia and the private sector. This strategy should rely on full range of stakeholders, although in most cases the simple, user-friendly materials about GEF and its op- main participants have been policy advocacy groups. erations, and should include provision of basic GEF documents in local languages. This strategy should be 142. A number of studies have evaluated the perfor- coordinated with the broadening of the Project Devel- mance of GEF on stakeholder participation either in opment Workshops. the Pilot Phase or in a specific set of GEF 1 projects. The Independent Evaluation of GEF's Pilot Phase con- D. STAKEHOLDER PARTICIPATION IN GEF ducted in 1994 found unsatisfactory participation by PROJECTS affected populations. It documented the need for a more systematic means of fostering mutually beneficial 139. The GEF policy on stakeholder involvement re- collaboration with multiple stakeholders, especially quires that all GEF projects provide for, among other NGOs. In 1995 Climate Network Europe commis- things, "consultation with and participation, as appro- sioned a series of studies on the role of participation in priate, of major groups and local communities several GEF climate change projects, including the throughout the project cycle."23 To evaluate GEF's Renewable Resource Management Project in India. The overall performance in the area of stakeholder partici- study found that, although there had been limited pation, the study team examined the policy framework NGO participation at the design phase, the implemen- created by GEF as well as the practices associated with tation phase had involved a wider group of stakehold- stakeholder participation in projects. ers. It also found that GEF guidelines are so complex and lengthy as to practically exclude the involvement THE BACKGROUND: PREVIOUS EVALUATIONS of smaller stakeholders at the design phase. 140. The benefits of stakeholder participation include 143. The NGO Working Group produced a report in enhancing country ownership; ensuring that the needs 1996 with case studies of NGO participation in GEF of affected communities are adequately met; improv- projects (these include acting as advocates, facilitating ing project design, implementation, and evaluation; policymaking, contributing to project development and helping to strengthen the capacities of NGOs and and implementation, and providing outreach for civil society groups. Such benefits can contribute to GEF). It found four types of problems: difficulties, achieving desired project impacts and sustainability. such as cash flow problems arising out of the World Bank's complex and often slow procurement proce- dures; competition with nonlocal consultants, who Global Environment Facility, Public Involvement i7 GEE-Financed Projects (Washington, D.C.: June 1996), p. 2. Issues at the Country Level 27 tend to be favored by the World Bank; lack of under- 147. UNEP adopted a policy and procedures relating standing of complex GEF/World Bank procedures and to public availability of documentary information on decisionmaking processes; and dissatisfaction with the GEF operations in 1993.27 In 1994, its executive com- rules that prohibit the use of GEF funds for capacity mittee approved a policy and procedures for public building, which is necessary to increase NGO capacity participation in its GEF operations. This was designed to absorb project funds, to foster public involvement in GEF operations and provides a detailed list of groups encompassed in its 144. A second study produced for the GEF Council definition of "public."28 Basically, these two sets of meeting, Promoting Strategic Partnerships between GEF documents provide for public access to information, and the NGO Community,26 although not an evaluation consultations with relevant stakeholders, and provi- of GEF performance, noted that GEF has not taken full sion of opportunities for stakeholder involvement in advantage of the potential of NGOs, academic insti.u- implementing UNEP's GEF projects. Both sets of tions, and private sector groups. It made many recom- policy documents, however, make explicit references mendations on facilitating the greater participation of to the fact that the provisions are for the "sole purposes such groups, including expedited access to medium- of UNEP's participation in GEF, pending the adoption sized grants. approval of an agency-wide directive," an indication of the documents' unique and precedent-setting nature. THE POLICY FRAMEWORK FOR STAKEHOLDER PARTICIPATION IN GEF PROJECTS 148. Like UNEP, UNDP has adopted policies on the disclosure of public information and documentation. 145. In response to recommendations by the Indepen- The policies on participation have specified a broader dent Evaluation of the Pilot Phase and other studies, the group than NGOs, highlighting the importance of civil GEF Secretariat issued clear policy guidelines on stake- society organizations29 and attempting to engage holder participation in projects, requiring that stake- smaller groups, such as community-based organiza- holders are identified clearly and consulted with tions, in UNDP's work. Its policy statement on this throughout the project cycle. The study team noted issue lists three principal objectives: encouraging that these guidelines were developed by the GEF Sec- policy dialogues among government, civil society orga- retariat in collaboration with the Implementing Agen- nizations, and donors; supporting capacity-building cies and that they present a comprehensive and needs of civil society organizations; and enhancing the far-reaching policy framework. It has added a social capacity of UNDP offices to strengthen such partner- scientist to the staff who is responsible for reviewing ships. It is partially in recognition of its experiences with cross-cutting issues and lessons. The officer reviews and emphasis on establishing partnerships with such project proposals and comments on the integratior. of groups that UNDP assumed responsibility for the SGP. stakeholder issues. 149. The World Bank's policies for involving stake- 146. The effectiveness of GEF policy guidelines de- holders not in the public sector (particularly NGOs) in pends on the responses of the Implementing Agencies its projects fall into three categories: those relating to and recipient governments. Stakeholder participation involving NGOs in project preparation, those relating is closely linked to the issue of transparency and ac- to environmental assessments, and those relating to countability in the operations of the Implementing disclosure of public information. These policies have Agencies. The team, therefore, examined agency poli- emerged in response to the increasing importance of cies regarding stakeholder participation and public NGOs in development activities and the need for the access to project information. Bank to guide its staff to ensure early involvement of 26 Promoting Strategic Partnerships Between GEF and the NGO Community. A Report from the GEF-NGO Working Group (Washington, D.C.: February 29, 1996), GEF/C.7/lnf.8. 27 "UNEP Administrative Note: Policy and Procedures Related to Public Availability of Documentary Information on GEF Operations." 28 Public includes the scientific community; representatives cf environmental, consumer, women's youth, indigenous peoples' educational and social and economic development associations or groups; and NGOs that may have an interest in or may be affected by a GEF/UNEP activity or decision. 2 UNDP defines civil society organizations as including NGOs, peoples organizations, women's and youth groups, grassroots movements and organizations of indigenous peoples, consumer and human rights groups, arid so on. 28 Study of GEF's Overall Performance NGOs in all stages of Bank project processes.30 The 153. The following types of stakeholders have been Bank has initiated annual meetings with the NGO- involved in Pilot Phase and GEF 1 projects (based on World Bank Committee and has instituted a policy frequency of involvement and in terms of institutional that advocates that prospective borrowers use NGOs3' capacity-building impact): academia, international wherever appropriate. In the environment sector, the NGO constituencies, national and local NGOs, and the Bank's Operational Directive 4.01 expects prospective private sector. GEF projects involving trust funds have borrowers to take the views of affected groups (includ- generally been effective vehicles for securing broadly ing tribals and indigenous people) and local NGOs based participation of these different groups within the fully into account, especially in preparing environ- same project. They have also demonstrated flexibility mental assessments. in opening doors for private sector groups, such as the tourism industry. There may be a need for more de- 150. Worid Bank projects that cover areas inhabited tailed disaggregation of stakeholders to ensure that the by indigenous societies are required to delineate an full range of players in the industries and activities action plan to deal with indigenous communities' con- involved in each focal area can be identified and effec- cerns. Countries are expected to hold consultations tively integrated early in the process. with affected groups in these environmental assess- ments of projects. Its 1994 policy on disclosure of 154. The project documents place significant emphasis information expands the range of documents that are on consultations with NGOs and local communities, to be made available through its Public Information but there is a wide range of understanding of what Center or, in the case of the environmental informa- "consultations" means. These could be as limited as pro tion, in the client country at a public place that is forma "briefings" or as detailed as ongoing interactions accessible to affected groups and local NGOs. The and joint planning with NGOs. The latter is the desired policy for disclosure of information on the Bank's GEF option, as it emphasizes genuinely local representation operations goes beyond this and provides for more in consultations as well as clarity on the expected out- open access to GEF project-related information. comes of these consultations. A potential pitfall of such emphasis on consultations is that they may be viewed as 151. The GEF policy requires that projects monitor an end in themselves, especially if there is no provision and keep a record of stakeholder consultations with for feedback to the local communities. During the coun- major groups and local communities during project try visits, team members heard complaints from com- preparation. Although the Implementing Agencies munity members that they did not receive any reports regularly keep records of such consultations, the team about the outcome of many consultations. notes that GEF's specific integration of this activity into its policy guidelines has elevated the policy signifi- 155. GEFprojectshaveestablishedavarietyofinstitu- cance of this practice. tional mechanisms to bring government and nongov- ernmental stakeholders together. The Russian STAKEHOLDER PARTICIPATION IN GEF PROJECTS Biodiversity Project, for example, established the joint International Expert Council on Protected Areas and 152. The study team examined project documents for the thirteen-member Lake Baikal Supervisory Com- more concrete indicators of plans for stakeholder par- mittee, which consists of six nongovernmental repre- ticipation. The indicators noted include the types of sentatives from the local, academic, scientific, social, stakeholders identified, the provisions for consultation and NGO communities. In the Mexico Protected Areas with stakeholders, the representative nature of the in- Project, in each of the ten protected areas that form the stitutional frameworks that are set up, the extent to core of the project, technical advisory committees which NGO stakeholders play an executing role in make provision for the active participation of stake- projects, and the financial allocations that the projects holders, such as indigenous communities. make to support such activities. IC This policy note (OPN 10.05) was reissued as an Operational Directive in 1989 and was replaced in March 1997 by GP 14.70 with specific references to different groups, such as 'private organizations that pursue activities to relieve suffering, promote the interest of the poor. protect the environment, provide basic social service, or undertake community development." J' The VWcrld Bank defines NGOs as 'groups and institutions that are entirely or largely independent of government." Issues at the Country Level 29 156. The study team also examined reliance on non- education and for institution strengthening). Although governmental stakeholders for the execution of GEF some stakeholders may benefit from these education projects. Some projects use such groups to execute activities, a limited budget focusing specifically on projects or as contractors or subcontractors. UN]DP stakeholder issues is unlikely to secure more than just reports in its 1997 PIR that 84 percent of its full GEF a one-time full participation exercise. projects involve NGOs in one of two roles-project execution or policy/advisory-and has recently issued 160. GEF 1 projects appear to be paying closer atten- guidelines on NGO execution of projects. The large tion to these budget provisions, because adequate bud- sums of money involved in GEF projects and the lim- get allocations can ensure that consultations are ited technical and administrative skills of local NGOs meaningful for the lifetime of projects. Some GEF 1 to absorb or manage such funds effectively may ac- projects have allocated more than 50 percent of total count for the limited role of nongovernmental stake- project costs for local-level activities that involve com- holders in this regard. munity participation in planning, such as "microplanning" (India Ecodevelopment), 157. The study team found that this approach is more "ecomanagement" (China Nature Reserves Manage- likely in the case of a trust fund than in other types of ment), and "area/village development activities" (Indo- projects. For example, the three biodiversity projects nesia Kerinci Seblat). The UNDP 1997 PIR notes that in Brazil, Mexico, and Costa Rica were initiated by the ecological zoning subproject of the larger Pilot governments but eventually turned over to NGOs- Phase Regional Support for the Conservation and Sus- Fundacion Getulio Vargas in Brazil, Mexican Fund for tainable Use of Natural Resources in the Amazon Nature Conservation, and the National Parks Founda- Project has allocated more than 25 percent of its bud- tion in Costa Rica-for implementation. This practice get to consultations and that 50 percent of staff time could yield many benefits, including institutional ca- has been spent on stakeholder issues. It is important to pacity building and improved working relationships note, however, that in many instances all public aware- between public and nongovernmental sectors. ness components of projects-training programs, workshops, publication of information, subcontract- 158. GEF 1 projects appear to be making greater at- ing, and so on-can be and are categorized as stake- tempts to specify how statements about stakeholder holder participation. participation will be followed through in projects. The team's review of work programs for GEF 1 projects E. EXPERIENCES WITH STAKEHOLDER shows significant discussion between the Implement- PARTICIPATION BY FOCAL AREA ing Agencies and the GEF Secretariat on the means of verifying statements in project documents regarding 161. Biological Diversity. Stakeholder participation stakeholder participation. The Implementing Agencies issues in biodiversity projects present a complex set of provided clarifications and descriptions of how stake- problems for project design and implementation, in- holders will be identified, consulted, and otherwise cluding: the inherent tension between traditional ap- involved in the project. proaches to biodiversity conservation (planning and "policing" protected areas) and the survival and liveli- 159. One indicator of the potential of provisions in hood needs of local communities; the need to secure project documents to achieve optimal participatiorn is the collaboration of communities in "buffer zones" that the level of budget resources allocated for consulta- might be established as part of reserve management; tions. In some projects, it is difficult to separate con- the need to promote a biodiversity conservation ethic sultation activities from the public education and that accommodates new management partnerships be- awareness components. (Indeed, some of these act:ivi- tween protected area managers, the users of resources, ties may overlap.) This was particularly true of some and community groups; and the relatively limited ex- Pilot Phase projects. For example, the Russia perience and expertise within Implementing Agencies Biodiversity Project is funded by a $25-$26 million working on an interdisciplinary basis on each of these GEF grant. It allocates $75,000 to support stakeholcler issues within the same project. Therefore, biodiversity work groups as part of the biodiversity policy support projects often require long, painstaking processes to component (an amount that implies this is not as high ensure stakeholders' participation and to reconcile it a priority as other activities, especially when compared with biodiversity protection goals. with the 11 percent allocations for public support and 30 Study of GEFs Overall Perfornance 162. These lengthy processes may be one of the holders have been involved, although most of the tradeoffs associated with all aspects of GEF project projects identify NGO groups as potential partners. preparation; these processes have given GEF projects in some countries a reputation as complicated, repeti- 166. One GEF 1 international waters project that is tive, cumbersome, and excessively long. Nevertheless, designed to engage NGOs is the Lake Victoria Environ- these processes can have a positive impact on stake- mental Management project. In Kenya, OSIENALA holder participation. For example, the Biodiversity (Friends of Lake Victoria), a local NGO that acts as an Conservation in Southeast Zimbabwe Project has iden- intermediary for the smaller, less well-organized com- tified five key stakeholder groups that are now devel- munity groups in the villages surrounding the lake, oping proposals for possible participation in the was involved in early consultations with communities. project. The process of consultation with and among However, since the government took over project co- these groups is providing the basis for different (and ordination, such interactions have subsided. Critics sometimes conflicting) interests to be better defined. claim that this shift is evidence of the government's reluctance to work with existing NGOs and that it is 163. Biodiversity projects may also require provisions taking its time to set up its own "NGOs" to participate for resettlement, land and property use rights, gender in this project. Team members visiting one of the or other special groups' concerns, and complex social communities on the Kenyan side of the lake found that assessments. One. factor that could improve the suc- neither community members nor local authorities had cess of GEF projects is the strengthening by Imple- much knowledge of the specifics of the project and the menting Agencies of methodologies for mainstreaming potential role that they could play in it. social and gender concerns specifically in environment projects, especially through increasing reliance by Conclusions lmplenien:ing Agencies on the expertise of social sci- entists and the systematic documentation of experi- 167. The study team found that the issuance of GEF ences with social concerns in project implementation. guidelines on stakeholder participation in GEF-fi- The 1997 Project Implementation Review highlights nanced projects has been one of the significant accom- the "lack of explicit treatment of gender issues in plishments of GEF 1. They provide the basis for one of project implementation reviews." the most extensive and far-reaching policies on public involvement in, and disclosure of information on, 164. Climate Change. Climate change projects are projects. more likely to involve private sector stakeholders than biodiversity projects. Projects involving new energy 168. The team found that GEF 1 project designs have technologies require more private sector stakeholder involved detailed and comprehensive plans for public involvement at the design phase to secure their inpuL participation, especially in the biodiversity focal area. regarding such issues as assumptions about market Most of these projects are in the early stages of imple- performance of technologies. A large and varied group mentation, but the team found that some projects are of private and public sector organizations, including already including local stakeholders in key project solar industries, parastatals, and public utilities, are activities. Projects involving trust funds in particular involved in implementing the Photovoltaics for House- have provided innovative opportunities for different holds and Community Use project in Zimbabwe. The stakeholders to work together on the same project at IFC-executed Small and Medium-Scale Enterprise Pro- policy and operational levels. In some cases, however, gram has approved NGOs as an appropriate group of local communities have not been provided with feed- intermediaries. back on consultations. The team finds, therefore, that careful monitoring and evaluation of progress in actual 165. International Waters. Due to their implementation of GEF guidelines and project provi- transboundary nature, intemational waters projects in- sions for stakeholder participation is needed. volve upstream policy-oriented activities that engage stakeholders in the technical and scientific communi- Recommendations ties as well as government policymakers. The projects often make provision for these stakeholders to be fully 169. The GEF Secretariat should work with Imple- engaged in the preparation and implementation of menting Agencies to develop quantitative and qualita- these strategies. Few local or community-based stake- tive indicators of successful stakeholder involvement Issues at the Country Level 31 at different stages of the GEF project cycle and to 174. Some GEF projects were fouind to be directly document best practices of stakeholder participation responsible for helping countries establish new mecha- by focal area. nisms for intragovernmental coordination. Egypt had no mechanism for coordinating its national policy to- F. IMPACTS ON COUNTRY PROGRAMS AND ward climate change when the GEF climate change POLICIES enabling activity was implemented. However, the chairman of the Egyptian Organization for Energy 170. The study team was asked to evaluate the impact Conservation and Planning told the team that the of GEF projects on country programs and policies. TIhe steering committee for the environmental assessment, team considered how the projects have helped to create which meets every three months to assess progress, broader changes in the way in which recipient countries was going to become the national committee on cli- deal with issues related to the four focal areas. mate change and would be the main vehicle for dis- cussing possible Egyptian participation in joint 171. As with the assessment of GEF's impact on implementation projects, for example. In Kenya, the awareness of global environmental issues, the team study team learned that the Pilot Phase Institutional encountered difficulty in some cases in isolating GEF's Support to Protect East African Biodiversity project, contribution to changing policies and programs in which was completed in December 1996, had estab- recipient countries. Other activities and actors also have lished the first unit for biodiversity within the Ministry provided impetus for such changes. For example, many of Environment and Natural Resources intended to countries have been adopting measures to incorporate coordinate the activities of all government ministries the results of the Rio process and Agenda 21 into nia- relevant to the problem. tional plans, policies, and programs. Bilateral and multi- lateral agencies are supporting many of these efforts. 175. A second observed impact of GEF projects is the Thus, in some instances, the impacts of GEF projects are higher government priority given to an activity benefit- difficult to distinguish from those of other agencies, ing the global environment. Most of the examples of including those of the recipient government itself, in this found by the study team are from the climate focal others, the relationship between the GEF project and area. The Pilot Phase China Issues and Options in the new policv or program is reasonably clear. GHG Emissions Control Project led to a new policy dialogue with the World Bank on energy efficiency and 172. To analyze the impacts on policy and prograrrm of renewables, which in turn resulted in a new level of GEF projects, the team relied on the informed assess- Chinese interest in investing in clean energy projects. ments of government officials and stakeholders in Lhe According to officials of the Indian Renewable Energy countries visited as well as officials and assessments of Development Agency (IREDA), the India Implementing Agencies. This analysis does not repre- Biomethanation Project created a distinct shift in per- sent an exhaustive examination of such project im- ception of the importance of creating energy from pacts within the ten-country sample of projects. The waste and led the government to spend $60 million in study team did not attempt to include every examiiple three years on that technology. The Mexico Efficient of projects that have impacts that are within the scope Lighting Project is cited as evidence of a government's of the project's explicit objectives, such as new stn.te- shift in priority relating to efficiency improvements. gies or action plans or mechanisms for The Poland Coal-to-Gas Project is credited by some intragovemmental or international collaboration. observers with having significantly increased aware- ness among government officials of the importance of 173. The study team found that GEF projects in the coal-to-gas conversions. The Pilot Phase Mexico Pro- ten countries had five types of impacts on recipient tected Areas Program is credited by both Mexican government policies or programs: establishment of environment ministry officials with having played a new mechanisms for intragovernmental coordinatiDn, crucial role in convincing the Mexican government to higher priority given to a particular activity benefiting significantly increase its budgetary outlays for pro- the global environment, new mechanisms for regional tected areas, which previously had been woefully inad- or subregional collaboration on a global environmental equate. issue, acceptance of greater stakeholder participation in projects, and development of a national strategy and 176. The third type of effect of GEF projects-new action plan for a global environmental problem. intergovernmental collaboration at regional or subre- 32 Studv of GEFM Overall Performance gional levels on a global environment problem-was 179. The changes that the study team found attribut- found in the GEF international waters projects project able in whole or in large part to GEF generally involve for Lake Victoria, which had as one of its objectives the new ways of addressing or giving priority to global establishment of new mechanisms to carry out such environmental issues. collaboration. The Lake Victoria Project has estab- lished a regional secretariat representing the govern- Conclusions ments of Kenya, Tanzania, and Uganda to harmonize water quality and monitoring standards for the lake. It 180. Based on analysis of projects in the ten countries is also facilitating the creation of the Lake Victoria visited by the study team, the team found a number of Fisheries Organization to regulate fishing more effec- significant GEF project impacts on country policies tively. In this case, it is clear that the creation of these and programs, including some going beyond immedi- new institutions for international collaboration were ate project objectives. Other actors clearly played some stimulated by the GEF project. role in certain cases, but in other cases, the GEF can claim the credit. Given the relatively small size of GEF 177. The fourth type of impact of GEF projects has projects, the team found that these changes represent a been to convince recipient governments to accept positive achievement. more extensive involvement of nongovernmental stakeholders than is usually normal in project develop- G. HANDLING OF POLICIES AND ACTIVITIES ment and/or tmplementation. For a variety of political, THAT COULD UNDERMINE PROJECT SUCCESS social, and cultural reasons, many recipient countries have not established collaborative relationships with 181. Macroeconomic or sectoral policies and eco- civil society groups. At the same time, global environ- nomic activities may undermine GEF projects either mental benefits in themselves do not tend to receive by creating perverse incentives that frustrate market high priority in many countries unless they are linked penetration, as in the case of energy pricing, or by to social and economic priorities, mainly poverty re- impinging physically on the project area, as in the duction. A potential benefit of the increased involve- cases of building roads through protected areas, min- ment of civil society groups is the likelihood of ing, unsustainable logging, or damaging tourism de- creating an appropriate forum for these different pri- velopment. One of the challenges faced by the orities to be combined within the context of securing Implementing Agencies, therefore, is how to deal effec- global environment benefits. In the case of the India tively with such policies and activities at each stage of Ecodevelopment Project, for instance, the Ministry of the project cycle. Forestry adopted an approach to community partici- pation in management of protected areas that it had 182. This can be done in several ways. Any such threat resisted in the past. to the project needs to be identified early in project design, discussed with project proponents, and re- 178. A fifth policy impact-the development of a ferred to in project documents. Assurances of actions strategy and action plan-occurs most frequently in to remove or prevent the threat need to be secured in the biodiversity focal area, as many govemments have negotiations on the project agreement. In addition, if sought GEF support to establish an overall biodiversity the policies or activities do, in fact, appear to under- strategy. The China Biodiversity Conservation Action mine project effectiveness during implementation, the Plan, which resulted from a Pilot Phase Pre-Investment Implementing Agency must take action through repre- Facility project approved in March 1992 and was com- sentations to the government and, if necessary, halt pleted in 1994, has resulted in the development Of disbursements to bring about action to remedy the several plans, for example, such as the agricultural situation. Unless commitments to avoid or prevent biodiversity action plan, the National State Oceanic undermining actions are written into the project docu- Administration's marine biodiversity action plan, and a ment, such issues can be contentious. mangroves action plan. These have led to project pro- posals, such as the wetlands management project (sub- 183. Given the small size of its projects, GEF does not mitted for GEF funding through UNDP). It has also led have the ability to leverage fundamental policy to the funding of the GEF Nature Reserves Manage- changes on issues in which the economic stakes are ment project approved in 1995. high domestically, particularly in countries with large economies. However, the Implementing Agency can Issues at the Country Level 33 insist that a specific activity in a particular area not rather than in terms of specific sectoral activities. That interfere with the project. It may sometimes be desir- left open the possibility of differences in interpretation able to proceed with the project in spite of the activity. over what would be permitted within or near the But when the threat of perverse incentives or physically project site. And in the Congo project, the World Bank damaging activities is severe and when the Implement- correctly identified logging as a threat to the project, ing Agency determines that the policy or activity in but only within the national park and not in adjoining question cannot reasonably be expected to end, it may areas. It also did not identify gold mining specifically not be desirable to go ahead with project development. as one of the activities that could disrupt the project, although it specified the requirement for gazetting pri- 184. The team looked into how the Implementing ority project sites in the project brief. Agencies have dealt with projects in which govern- ment policy or sectoral activities constitute a signiii- 187. The study team found that the Implementing cant problem. Based on the sixteen country studies as Agency has usually failed to obtain adequate formal well as interviews with Implementing Agency task assurances from governments in project agreements managers, regional coordinators, and thematic special- about policies and activities that could affect project ists, the team identified seven cases of projects now in success. In only two of the seven case studies did the implementation in which government policies or Implementing Agencies obtain formal assurances from sectoral activities could pose significant threats to the government that were adequate. In the case of project success and on which the handling of the issue India Ecodevelopment, the World Bank raised the could be documented. This is just a sample of a much problem of development activities that might impinge larger universe of projects in which this issue is relevant. on project success-logging practices, road building, mining, cement manufacturing, and tea and teak plan- 185. The study team found that Implementing Agen- tations-during project development and insisted that cies have generally identified in project documents the project agreement include assurances that the gov- policy issues or sectoral activity that could pose signif'i- ernment would not permit such activities either in the cant risks to the project and have raised the issues wi h project area or in areas adjoining it. In part as a result, recipient governments during project design. In all the Indian Ministry of Environment and Forests drew seven case studies, the Implementing Agency included up a list of twenty-nine development projects that had some mention of such threats in project documents. to be kept at a reasonable distance from the project However, in five of the seven cases, the identification sites. And, in the case of Indonesia Kerinci Seblat, the was either too general or incomplete. In two cases government agreed to preclude road construction or (Jordan Consolidation and Conservation of Azraq upgrading within the protected area until management Wetlands and Dana Wildlands Project and Egypt Red and zoning plans were completed for the project area. Sea Coastal and Marine Resource Management Project), the Implementing Agency failed to identify a 188. But in the Congo Wildlands case, the assurances key problem. In the Jordan biodiversity conservation given by the government in the grant agreement did project, the problems of tourism, copper mining and not cover logging adjacent to but outside a priority grazing were identified, but the government's subsi- reserve, nor did it specifically mention mining. In dies for grazing were not. Similarly, in the case of the 1996 the Bank learned that the government had Egypt Red Sea Coastal and Marine Resource Manage- granted a fifteen-year renewable logging and process- ment project, the World Bank identified unregulated ing permit on a concession close to one of the priority tourism, but did not identify govemment subsidies to sites and granted a mining exploration permit within develop tourism, in the form of the sale of coastal larnd one of the priority sites. In the Philippines case, the at bargain basement prices, as an issue that had to be World Bank made the implementation of legislation on addressed in the project preparation stage. a National Integrated Protected Areas System a condi- tion for a sectoral adjustment loan to deal with the 186. In both the Philippine Conservation of Priority problem of economic activities that might impinge on Protected Areas Project and the Congo Wildlands Pro- the project's success. But the legislation was ambigu- tection and Management Project, the problem was lack ous on whether minerals or geothermal energy explo- of specificity in identification of threats by the World ration activities are forbidden within the protected Bank. In the Philippine case, the World Bank identi- areas. The absence of specific agreements on the activi- fied the threat in terms of the absence of gazettittg ties in question leaves uncertainty as to whether such 34 Study of GEFs Overall Performance activities will be allowed in the future. In the case of not acted to get more explicit, formal assurances from Zimbabwe Photovoltaics, the government gave UNDP the Philippine government on the interpretation of the assurances that tariffs on photovoltaic components for protected areas system legislation. In the Egyptian the project itself would be reduced, but not on those case, the Bank has not followed up on the photovoltaic components beyond the project's dura- government's subsidized sale of coastal land or tourism tion. And in the Jordan Consolidation and Conserva- development, which has resulted in the allocation of tion Project and the Egypt Red Sea Coastal and Marine more than 40 percent of the Red Sea coastline to Resource Management cases, the government did not tourism developers and speculators by mid-1997. This give UNDP formal assurances that grazing and tourist development appears to have undermined the pros- development land subsidies would not be provided. pects for project success, because it moots the develop- ment of a coastal and marine management plan that 189. In all but one case (India Ecodevelopment), would guide the allocation of land for tourism and some follow-up was needed in the implementation biodiversity protection. phase of the project with regard to policies or sectoral activities that present a risk to project success. In four Conclusions of the six cases where it was needed, either the Imple- menting Agency or the project staff has taken steps that 191. The study team found that more than half the have brought about some reduction of the risk. In the projects studied have had some problems in the han- Indonesia case, when the state government tried to put dling of policies and activities that could have negative a new road through the protected area in violation of effects on project outcomes. In most cases, assurances the project agreement, the Bank resisted it, threatening from the government regarding the policy or activities to halt fund disbursement. In the Congo case, the Bank in question were either not forthcoming or were not considered the logging and mining concessions a vio- specific enough; in some cases, the identification was lation of the grant agreement, even though the govern- incomplete or lacking in specificity. Implementing ment argued that the grant agreement only covered Agencies have generally followed up where it was logging concessions inside the priority sites and that needed, in some cases threatening to halt disburse- mining was not mentioned as an undesirable activity. ment, and these interventions have usually had a fa- The World Bank acted in early 1997 to suspend dis- vorable impact on the situation. In one case, the bursements on the project in large part because of chances of project success were clearly undermined, these activities, although the suspension was techni- and in two others, the outcome is still not clear. cally based on the government's failure to fulfill finan- cial obligations .2 Disbursements were resumed after Recommendations the government made financial restitution and agreed to an environmental assessment of the mining operation as 192. The GEF project submission format's description a basis for determining its future and the logging com- of project risks should call for identification of any pany agreed to measures to ensure that it would not specific policies or sectoral economic activities that negatively affect conservation in the core reserve.33 could negatively affect project success, as well as the steps that need to be taken to reduce the risks to 190. In the Jordan case, the project staff itself negoti- project success from those policies and activities. ated an agreement with the government to obtain regu- lation of copper mining in the project area but was 193. The GEF should adopt a policy requiring that unable to stop mining completely. In the cases of Implementing Agencies obtain clear, formal commit- Zimbabwe Photovoltaics, UNDP discussed the tariffs ments from recipient country governments regarding on photovoltaic components in general with the gov- policies and sectoral activities identified as increasing emnment and has now obtained assurances that the the risk of project failure before proceeding with tariffs will be lowered. However, the World Bank has project implementation. `2 See letter fromJean-Louis Sarbib, vice-president, Africa Region, to Nguila Moungana Nkombo, minister of the economy, finance, and planning Uanuary 10, 1997) in GEF Secretariat files. Letter from Lars Vidaeus, executive coordinator. World Bank GEF Operations, to Mohamed T El-Ashry, CEO and chairman, GEF (June 9, 1997) in GEF Secretariat files. Issues at the Country Level 35 H. FINANCIAL SUSTAiNABILITY Of GEF its near-term implementation, such as establishing PROJECTS fully functional intragovernmental coordination mechanisms. Likewise, the necessary time frames for 194. The GEF portfolio is still young and most the Guyana Sustainable Forestry Project and the Papua projects are not yet completed, so it is premature to New Guinea Biodiversity Program were underesti- reach conclusions about the long-term sustainability of mated. In cases in which time frames are insufficient, projects. Nevertheless, information provided by the the GEF grants do not necessarily have to be increased, Implementing Agencies, government officials, NGC)s, just disbursed over a longer period. In other cases, and others provides a general picture of the post- both a longer time frame and a larger GEF contribution project outlook for many projects. may be needed. Such may be the case for the Zimba- bwe biodiversity project. 195. The financial sustainability of a project-that is, its continuance or expansion beyond the disbursement CLIMATE CHANGE PROJECTS of GEF funds-can be influenced by a number of factors: its ability to attract government and commu- 198. The projects that appear to be most sustainable nity buy-in, the cost of continuing the project, and the are those that involve support for near-commercial degree to which improvement of management skills, practices, programs, or technologies. For near-com- training, and general institutional development have mercial projects, post-GEF sustainability is defined by been emphasized during the project. These are impor- the projects' replicability. Thus, the sustainability of tant determinants for all projects but appear to be the project can be measured largely by its expansion especially important for those that have little or no into additional communities. Project sponsors expect commercial potential. Conversely, the sustainability of the Brazil Energy Efficiency Project, for example, to be near-commercial projects, such as some of the energy widely replicated. projects, largely depends on their ability to push (or pull) the market and, thus, to stimulate replication 199. Many of the energy projects under the Opera- using private funds. tional Programs (OP) 5 and 6 categories, such as the India Altemate Energy (wind power component), Po- 196. Projects involving capacity building appear to be land Efficient Lighting, India Biomethanization (abat- among the most sustainable. The 1996 PIR highliglhts toir anaerobic digestion sub-project), and Mexico three projects as being successful in this regard.- Efficient Lighting projects, involve near-commercial UNDP's Monitoring and Research Network for Ozone activities and have good prospects for replication. The and Greenhouse Gases in the Southern Cone Project, India Alternate Energy project, which funded a modest the related Global Monitoring of Greenhouse Gases wind energy demonstration, has helped facilitate an Including Ozone Project, and UNDP's Sustainable Dle- expansion of wind power well beyond what the GEF velopment and Management of Biologically Diverse subsidy covered. The project helped stimulate subse- Coastal Resources Project in Belize. All three are insti- quent investment roughly the equivalent of 800 mega- tutional development types of projects, as opposed to watts of additional wind power capacity. investment projects. Although these may well help set the stage for environmentally sustainable development 200. Other projects involve financial approaches that practices, they are also less risky than investment are explicitly designed to keep the project operating projects. For countries reluctant to commit resources after GEF funds are fully expended. These include the to sustainable practices in energy, forestry, land use, World Bank's Brazil Energy Efficiency project, the and so forth, it may be both financially and politicaLly Bank's Indonesia Solar Home System Project, and easier to support these monitoring and institutiorial IFC's Hungary Energy Efficiency Cofinancing Project. kinds of activities on a recurring basis. In the Indonesian project, solar dealers will receive GEF grant funds, some of which they can invest in 197. In some cases, projects have needed a longer strengthening their businesses. The initial start-up cost time frame than permitted to implement the project will be high for the dealers, and the GEF grants will activities, demonstrate success, and achievTe financial help pay for this higher price. By the time the GEF sustainability. For example, the Lake Victoria projc ct grant funds are disbursed, it is hoped that the start-up may need five to seven years instead of the expected costs will have dropped enough for dealers to continue three to five years to resolve certain issues that impede operating without subsidies. 36 Study of GEF's Overall Performance 201. Although some generalizations can be made ernment decision that continuing the activity is in its about what kinds of projects are near-commercial, this development interest. Projects that include commer- will vary by country and market conditions. For ex- cial elements such as ecotourism or nontimber enter- ample, solar photovoltaics appear to be increasingly prises stand a greater chance of achieving financial commercial in a number of countries and the Indone- sustainability because such elements can pay at least a sia Solar Home System project seems poised to imple- portion of the recurrent costs. IFC's Small and Me- ment a sustainable PV credit system, but dium-Scale Enterprises Project and Terra Capital Fund GEF-supported PV efforts in India and Zimbabwe may are GEF's main efforts to exploit commercial face difficulties in continuing without GEF funds. In biodiversity opportunities. the India Alternate Energy Project, the greater financial sustainability of the wind power sub-projects com- 205. Because grant-making agencies and organiza- pared with the PV sub-projects may be due to higher tions change over time, the need for most biodiversity PV marketing costs, lower consumer awareness of PV, projects to attract additional grant funds may not be and more limited ability for beneficiaries to pay for PV sustainable in the long term. Hence, many such technology.34 projects are seeking to establish trust funds. In the GEF Pilot Phase, six out of thirty biodiversity projects had 202. Most of the climate portfolio involves near-com- GEF-funded trust funds. So far, seven projects in the mercial projects, although some projects only hold the operational phase have or anticipate having them. promise of demonstrating near-term improvements in Trust funds provide ongoing funding because only the a particular technology or practice, thereby reducing interest earnings of the fund are used. If well-managed, the time it takes to become commercial. The ability of the fund will finance the project in perpetuity. these more innovative or risky projects (which fall within the OP7 category) to attract commercial financ- 206. Some GEF Council members are concerned that ing is not as important as their contribution to improv- capitalizing a trust fund involves a much larger com- ing the economics and increasing the knowledge base mitment of GEF funds than simply paying for the near- of a given technology or practice. This increases the term costs of a project. For example, a protected area chances of attracting new (noncommercial) funding project that might cost GEF $5 million over five years for the project or its replication so that further ad- would require a trust fund of $20 million to yield $1 vances can be made. Examples include the Brazil Bio- million annually (based on annual interest earnings at mass Gasification project and the upcoming India 5 percent). On the other hand, without a trust fund, Solar Thermal hybrid project. So far, no such noncom- many projects with recurrent costs are likely to either mercial GEF projects have been completed, so their return to GEF for subsequent grants or disappear. sustainability remains uncertain. 207. One indicator of a noncommercial project's like- 203. The increased orientation of climate projects to- lihood of attracting future resources is the degree of ward technology commercialization and market trans- political support generated by the project within the formation and accompanying private sector financing host government. A proportionately large government increases the sustainability of the GEF climate portfo- contribution can sometimes signify stronger support lio. The trend toward private sector financial involve- for the project's objectives and, thus, a willingness to ment is due partly to project sponsors' desire to ensure support the project once GEF funds have been spent. financial sustainability and partly to the need for this For example, the Government of Indonesia has con- involvement to finance such near-commercial projects. tributed $500,000 to supplement the $1 million from GEF for the Rhino Protection Project. This program is BIODIVERSITY PROJECTS achieving more success than most other GEF projects in Indonesia and has received commitments for addi- 204. With few exceptions, projects in the biodiversity tional funds at the end of the GEF project cycle. A high portfolio that do not have trust funds are unlikely to proportion of govemment funding does not necessar- become financially sustainable without subsequent ily mean the govemment will pay recurring costs later, grants from a bilateral or multilateral donor or a gov- however. It does not even mean strong government Global Environment Facility, Project Implementation Review 1996 (Vv'ashington, D.C.: 1997), p. 13. Issues at the Country Level 37 support for all the project's aims. Although the Gov- was the case, for example, with the biodiversity ernment of Indonesia is providing $13 million toward projects in Argentina and Viet Nam and the climate the $47 million Kerinci Seblat Park Project, the project project in Brazil. In other cases, a second grant was has run into major problems, in part because of con- sought because the project was expanding into new flicting interests among different government agencics. areas or involved more time than was originally antici- pated. In nearly all cases, the second grant sought and 208. GEF project submissions are required to include awarded has been larger than the first one. a specific discussion of financial sustainability. Al- though many submissions give this topic only superfi- Conclusions cial attention, others contain plans for post-GEF financing. For example, the China energy conservation 211. The study team found that the post-GEF project included several domestic banks in project sustainability of projects is likely to vary greatly from preparation activities to familiarize them with energy project to project. Financial sustainability in the near- performance contracting and prepare them for even- commercial climate projects differs fundamentally tual financial support of performance contracting or.ce from that in largely noncommercial biodiversity the project is completed. Similarly, the India solar projects. The former depends largely on replicability thermal project is predicated on the state government by government or private investors, whereas the latter of Rajasthan raising electricity tariffs so that the state must be either self-financing through trust funds or electric utility will be able to collect enough ratepayer obtain additional grant financing from donors or the funds to pay for the solar-generated electricity when government. The experience of Pilot Phase projects the GEF funds are fully spent. The Indonesia now completed indicates that biodiversity projects are COREMAP coral reef project anticipates strengthening more likely to have serious problems of financial legal structures to allow coastal communities to charge sustainability than climate projects. fishing user fees that would capitalize a fund to pay For reef maintenance. 212. In some cases, unreasonably short project time- tables have made it difficult to implement project ac- 209. In general, however, serious financial planning tivities, demonstrate success, and achieve financial for project continuation in the post-GEF period ap- sustainability. The GEF family has not always been pears uncommon. The team's review of seventeen in- realistic about the time needed to implement some vestment project submissions in the ten focus projects, particularly in the biodiversity focal area. countries found that financial sustainability was ad- dressed in more than a cursory manner in just seven Recommendations cases. Many of the submissions confuse sustainability and project success. Most list factors the sponsors hcpe 213. The GEF Secretariat and Implementing Agencies will contribute to sustainability, but few discuss how should require that project proposals contain a more recurrent costs will be met. thorough assessment of options for achieving financial sustainability. 210. One indicator of sustainability is the extent to which project sponsors return to GEF for a second 214. The GEF Secretariat and Implementing Agencies grant. Of projects approved during the Pilot Phase and should encourage the broader use of biodiversity trust now completed, the proportion applying for another funds to help ensure the funding of biodiversity grant is relatively high in the biodiversity focal area: six projects in perpetuity. The Implementing Agencies out of eight completed projects. Five of these are coun- should continue to seek a high rate of leveraging of try-specific projects and one is a global project. In other sources of trust fund capital. contrast, only five out of fifteen completed (or nearly completed) climate change projects have applied for a 215. The Implementing Agencies should provide for second grant. Of these, only one is a country-specific longer project implementation periods-for example, project. It should be noted, however, that in some five to seven instead of three to five years-in cases in cases, although it was not specifically agreed to at the which project sponsors can show that extra time will outset, a follow-up grant was expected, as GEF fi- be necessary to implement the project and demon- nanced the preparation of management plans or feasi- slrale its viability for future funders. bility studies that would lead to implementation. This 38 Studv of GEF's Overall Performance IV. INSTFLMTUONAL ROLES AND RELATiONS A. MAINSTREAMING OF THE GLOBAL MAINSTREAMING IN THE WORLD BANK ENVIRONMENT BY IMPLEMENTING AGENCIES 219. The World Bank is unique among the three 216. One of the measures of GEF's success is the Implementing Agencies in that it is a lending institu- extent to which the three Implementing Agencies tion vith a centralized structure directed by a full-time "mainstream" the global environment. In the GEF Cor- executive board. It has a large and varied portfolio of porate Budget for fiscal 1998, mainstreaming is de- active projects and concentrates authority and re- fined as having two dimensions: first, increasing the sources in its country departments. Although the Bank number of GEF projects with cofinancing and, second, is client oriented, it has significant resources with which increasing the number of GEF-type projects in regular to influence client governments' investment priorities. operations of the Implementing Agencies.35 In fact, the three agencies have committed themselves to increas- 220 The indicators chosen by the study team for ing the resources committed as direct cofinancing of evaluating progress in mainstreaming in the World GEF projects and "associated, complementary, and Bank are: follow-up activities" in the four focal areas.36 The study team took these two criteria as a starting point for * The amount of cofinancing of GEF projects and fi- creating its own operational definition of nancing of associated World Bank loans that add mainstreaming. However, the team also noted that further global environmental benefits cofinancing statistics can be misleading and difficult to * The number and dollar amounts of loans in the regu- compare. lar World Bank portfolio that complement the GEF portfolio in the four focal areas 217. The study team determined that the definition of * Whether internal incentives for World Bank staff to "mainstreaming" the global environment for the pur- push for and manage projects with global environ- pose of this study must incorporate criteria going be- mental benefits are equal to those for the regular loan yond funding levels for GEF and non-GEF projects portfolio and that it must reflect the wide differences of struc- * The extent and quality of the integration of global ture, culture, type of operation, and level of resources environmental objectives into sectoral and adjust- among the three Implementing Agencies. So the team ment lending operations developed a set of criteria for mainstreaming that are * The extent to which the Bank does programming on specific to each agency. the basis of global environmental objectives, as dis- tinct from country objectives. 218. Analyzing mainstreaming in the World Bank in- volves more criteria than for the other two Implement- Amount of Cofinancing of World Bank GEF ing Agencies. In addition, the Bank's GEF portfolio as Projects and Associated Bank Loans well as regular portfolio of projects is much larger in financial terms. Therefore, the space allocated to the 221. The World Bank agreed as part of the "Imple- World Bank is substantially greater than that allocated menting Agency Work Program" adopted by GEF in its to UiNDP and UNEP. In contrast, the criteria for assess- Corporate Business Plan for fiscal 1998-2000 that its ing mainstreaming in UNEP are fewer and its GEF mainstreaming would be judged by whether "an in- portfolio and regular budget are much smaller than creasing proportion of Bank GEF projects" are "associ- those of UNDP, so the analysis for UNEP is corre- ated in an integrated way with regular Bank spondingly shorter. operations."37 World Bank data show that, as of Sep- Global Environment Facility, GEF Cotpor-ate Budgetfor FY98, GEF/C.9/4 (April 1, 1997), p. 13. 3' Global Environment Facility, GEF Corporate Business Plan F99-FY01, GEF/C.10/4 (October 3, 1997), p. 13. Institutional Roles and Relations 39 tember 1997, 44 percent of World Bank GEF projects Total cofinancing mobilized by the Bank for GEF, approved during GEF 1 were associated with World thus, represents more than three dollars for every dol- Bank loans, whereas 56 percent were freestanding- lar of GEF funds. Most of this total was accounted for that is, they did not have a World Bank loan as part of by climate change projects, for which the Bank pro- their financing. vided $1.244 billion compared with $284 million from GEF itself-a ratio of 4.4 to 1. The study team 222. This is identical to the percentage that held during found this to be a significant accomplishment in the GEF Pilot Phase. However, the Bank's record of mainstreaming and an important contribution to cofinancing through associated loans is much better in GEF's success. GEF 1 than in the Pilot Phase, because only two World Bank-associated loans during the Pilot Phase were fully 225. Total World Bank cofinancing in GEF 1 is integrated with GEF projects (i.e., financing the same slightly less than the $2.227 billion mobilized by the activities that are financed by GEF granLs), whereas Bank during the Pilot Phase. But since about two-thirds more than 40 percent were fully integrated during GEF of the total Pilot Phase cofinancing was accounted for by 1, according to data provided by the World Bank GEF a single project (Philippines Leyte-Luzon Geothermal), coordination unit. Moreover, nearly one-fourth of t he the team found the Bank's performance in mobilizing associated loans during the Pilot Phase were associated cofinancing in GEF 1 to be substantially more effective for convenience only, according to a World Bank task than it was during the Pilot Phase. force report in mid-1996. Some of the loans that are categorized as associated loans by the World Bank do 226. The Bank generated the bulk of its financing for not fund activities that are related to the global environ- GEF climate projects through associated loans. Of the ment and are not considered as cofinancing in the total of $3.2 billion in Bank-generated financing for World Bank compilation of GEF project financing sub- GEF-related climate projects, almost 70 percent was mitted to the study team. The study team found eight mobilized through Bank loans associated with GEF associated loans in the Pilot Phase on which the World projects rather than from government counterpart and Bank did not claim any cofinancing for the global envi- other donor financing of freestanding World Bank- ronment in its osrn financial records, but only three implemented GEF projects. such associated loans in GEF 1'38 227. An even higher proportion of the cofinancing for 223. As of mid-1997, the World Bank had proviced World Bank GEF biodiversity projects came through $490 million of its own funds for cofinancing of GEF associated World Bank loans. Of the total of $691 projects in the form of loans for Bank projects associ- million mobilized by the World Bank for GEF ated with projects in the GEF 1 work program. Thlat biodiversity-related projects approved for GEF work total represents 75 cents for every dollar put into programs through June 30, 1997, 86 percent ($597 World Bank GEF projects by GEF itself, includ:ing million) was accounted for by loans associated with freestanding and associated projects. This amount is GEF projects. The Bank's mobilization of cofinancing slightly less than the amount during the Pilot Phase for biodiversity through associated loans on an annual ($554.6 million). basis is shown in table 4 below. 224. When all cofinancing mobilized by the World Lending for the Global Environment in the World Bank, including from governments, other funders, and Bank's Regular Portfolio the private sector, are added to direct Bank cofinancing, the total cofinancing for World Bank GEF 228. For the purpose of assessing the World Bank's projects in GEF 1 as of mid-1997 was $2.003 billion. mainstreaming of the global environment, the study 37 Global Environment Facility, GEF Corporate Business Plan FY98-00, GEF/C .8/6 (September 4, 1996), Annex 2, p. 3. 3"The Pilot Phase-associated loans included in this category are: Ecuador Biodiversity Protection, Red Sea Coastal and Marine Resource Management, Ghana Coastal Wetlands Management, Mexico P::otected Areas, Philippines Conservation of Priority Protected Areas, Poland Coal-to-Gas, Seychelles Biodiversity Conservation and Marine Pollution Abatement, and Turkey Tn-Situ Conservation of Genetic Biodiversity The GEF 1 projects are: Central Africa Regional Environment Information Management, China Efficient Industrial Boilers, and China Nature Reserves Management. 40 Study of GEFs Overall Petformance team distinguished between the Bank's financing of Bank's executive board. Therefore, the study team con- projects linked with GEF and its financing of and cluded that fiscal 1991, fiscal 1992, and fiscal 1993 mobilization of resources for relevant projects in its should not be considered part of the GEF period for regular portfolio. Although cofinancing GEF projects purposes of comparison with the pre-GEF period. The is an important dimension of mainstreaming in the comparison between pre-GEF and GEF period Bank Bank, the study team believes that the Bank's success lending for biodiversity and energy is based on fiscal in increasing lending for the global environment is 1994 as the first post-GEF year. another measure of its success in mainstreaming. Therefore, the criterion of lending for global environ- 233. Bearing these difficulties in mind, the team as- mental objectives in projects not associated with GEF sembled the data on the Bank's non-GEF lending on requires that overall Bank lending in the focal areas be biodiversity from fiscal 1988 through fiscal 1997. The analyzed in two separate categories: its mobilization of data are shown in Table 4 opposite. During the fiscal funding for the global environment in connection with 1988-94 period, the Bank's non-GEF-related lending GEF and its mobilization of such funding through totaled $645 million, for an annual average of $107 loans unconnected with GEF. million. During the period from fiscal 1994-97, repre- senting the GEF period, the total was $325 million for 229. To assess this dimension of mainstreaming in the an annual average of $81.3 million. However, virtually Bank, the team analyzed the World Bank's lending for the entire difference between the pre-GEF and GEF GEF projects for biodiversity protection and energy periods is accounted for by a single IDA project (Kenya efficiency and renewable energy that was unrelated to Wildlife Services) for $142 millionin 1992. When that GEF projects. It did not evaluate the Bank's perfor- project is removed from the data, they show no clear mance in regard to international waters because of a trend line. The only conclusion that can be reached combination of time constraints and the complexity of from the data is that biodiversity lending in the World separating out the data on Bank lending that are most Bank's regular portfolio unrelated to GEF has not in- comparable to GEF financing for international waters. creased from the pre-GEF period. It did not examine the ozone focal area, because the Bank does no lending related to ozone depletion. 234. When all cofinancing connected with World Bank loans for biodiversity associated with GEF 230. In the case of biodiversity, the team found that a projects is added to the annual World Bank high proportion of World Bank loans associated with biodiversity lending totals, overall World Bank financ- GEF biodiversity projects either would not have been ing for biodiversity since fiscal 1993 is shown to aver- made or would not have financed activities that effec- age $133 million annually compared to an average of tively protect biodiversity of global importance. There- $115 million annually during the pre-GEF period. It fore. lte study team believes thaL Bank loans associated can be concluded thaL GEF has accounLed for the with GEF can be separated legitimately from regular relatively small overall increase in the average annual non-GEF Bank loans to evaluate the success of the level of World Bank lending for biodiversity since Bank in generating greater interest in biodiversity fiscal 1993. The World Bank's GEF chief executive lending without the aid of grant assistance. coordinator argued to the team that the more success- ful the World Bank is in identifying opportunities for 231. A major methodological problem in regard to associating loans with GEF financing of biodiversity this dimension of mainstreaming is that constructing conservation, the less successful it will be in its lending an annual trend line for lending in a particular sector for that purpose apart from GEF. The coordinator may be misleading, both because project approvals suggested that he would expect the level of lending for may cluster in certain years rather than being evenly biodiversity conservation in the Bank's regular portfo- distributed over several years and because a single lio to decline as more and more borrowing countries large project can cause a major spike in the trend line. and Bank task managers become aware of the opportu- nity to obtain a "global premium" associated with pro- 232. A second methodological problem involves the tection of biodiversity of "global importance." This time lag between the creation of GEF and appearance argument is in line with the conclusion reached by an of a regular bank loan in annual statistics. It usually earlier internal World Bank study that found a trend takes at least two to three years between the beginning among IDA countries to avail themselves increasingly of project development and final approval by the of GEF grant financing for biodiversity conservation Institutional Roles and Relations 41 TABLE 4. FINANCING FOR BIODIVERSITY PROTECriON THROUGH WORLD BANK LOANS, INCLUDING NON-BANK CONTRIBUTIONS, FISCAL 1988-93 AND FISCAL 1994-97 (MILLIONS OF U.S. DOLLARS) Fiscal 1988-1993 Fiscal Year Not GEF-associated GEF-associated* 1988 21.40 0.00 1989 13.20 0.00 1990 244.40 0.00 1991 45.60 0.00 1992 245.00 44.00 1993 76.40 0.00 Total 645.00 44.00 Fiscal 1994-1997 Fiscal Year Not GEF-associated GEF-associated* 1994 70.40 15.30 1995 110.70 0.00 1996 3.20 0.00 1997 141.00 191.00 Total 325.30 206.00 Based on dates of GEF work plan approvals. Sources: Pilot phase-associated loan data from computer ran submitted by World Bank Global Environment Coordination Division, January 14, 1998. Data for 1988-96 from "The IBRD/IDA Prcjects Containing Biodiversity Elements: fiscal 1988-96," annex to Andrew Keck, "Biodiversity in World Bank Projects: A Portfolio Review," Land, Water, and Natural Habitats Division, Environment Department, World Bank, draft, n.d. Data for 1997 based on Gonzalo Castrco and Kerstin Canbv, "Biodiversity in 'World Bank Projects," January 9, 1998, table 3. Castro and Canby include in their annual totals data on GEF-funded projects as well European Union-funded Brazil Rain Forest Trust Fund projects, neither of which involves World Bank lending and are, therefore, excluded from the fiscal 1994-97 table. and to do less borrowing from the World Bank for that related lending for biodiversity conservation, even as it purpose.39 made loans linked with-and, thus, made more attrac- tive by-GEF grants. This view is based on the as- 235. It is impossible to prove or disprove this argu- sumption that there are some biodiversity ment based on existing data. The study team believes conservation projects that would not be funded by that it would have been possible for the World Bank to GEF because they are not of global importance but identify more opportunities for biodiversity projects would be in the interest of a potential borrowing coun- that are in the national development interest of the try. However, to the extent that the GEF policy is country in question and, thus, increase its non-GEF- perceived as not distinguishing between biodiversity of 3"See C. Andrew Keck, "Biodiversity in World Bank projects: A Portfolio Review," Land, Water and Natural Habitats Division, Environment Department, World Bank (no date), p. 3. 42 Study of GEFs Overall Performnance global importance and biodiversitv of national impor- sons with the previous period regarding supply-side tance, it increases the risk that potential borrowing management in general. countries would refuse to borrow for biodiversity con- servation unless it is hinked with a GEF grant. 240. An assessment of the Bank's lending for renew- able energy development must take into account the 236. The main methodological problem associated fact that geothermal energy, which was financed by with assessing climate-related lending in the Bank's both the Bank and GEF in the past, has become com- regular portfolio is determining what kinds of loans to mercialized to the point that neither are funding it any mnclude within the scope of the inquiry. The Bank longer. Lending for nongeothermal renewable energy provides financing affecting energy efficiency not only unconnected to GEF during the entire period from through end-user efficiency components of energy sec- 1990 to 1993 included four projects totaling $273 tor loans but in supply-side management components, million. But from fiscal 1994 through fiscal 1997, the such as reducing power sector losses and district heat- Bank made only one such loan in its regular portfo- ing as well. Nonenergy sector loans, including hous- lio-an $18 million component within the Indonesia ing, transportation, industrial pollution, and Second Rural Electrification loan approved in fiscal municipal services, also affect energy efficiency. 1995. The other loans for renewable energy have all been linked with GEF grants. Moreover, the Bank's 237. The study team decided to focus primarily on project pipeline includes no loans for nongeothermal non-GEF World Bank project components involving renewable energy development without GEF fund- end-use energy efficiency, both because complete data ing.40 on financing of nonenergy sector loans with impacts on energy efficiency are unavailable and because the 241. The World Bank GEF Coordinating Unit argued benefits to the environment are often incidental to that the World Bank should not be expected to lend for economic considerations. renewable energy technologies apart from GEF, be- cause they are not commercial. The study team recog- 238. With regard to end-use efficiency, data compiled nizes that borrowing countries would not take out by its Operations Evaluations Department indicate that loans for most of the projects financed by GEF and by Bank lending has increased during the GEF period, bilateral agencies on a grant basis. On the other hand, compared with the extremely low level of funding it is also clear that loans can be made for some renew- during the pre-GEF period. During the 1980-93 pe- able energy technologies in some countries without the riod, the Bank financed only about $110 million for addition of a GEF grant. For example, India borrowed end-use efficiency components in eighteen energy sec- $100 million from the Asian Development Bank in tor projects. During the 1994-97 period, the Bank has 1996 for the generation of 125 megawatts of cumula- financed components on end-use efficiency totaling tive power through biomethanation of industrial efflu- S245 million, most of which was for three large ent, bagasse-based cogeneration of power, and wind projects. And outside the energy sector, two projects in and solar-thermal energy. the Europe and Central Asia region have been ap- proved for heating efficiency in residential buildings 242. The study team notes that the viability of renew- for $310 million. The Bank, therefore, is now lending able energy projects in a particular country may de- approximately sixteen times more for end-use effi- pend in part on whether the government has created ciency than it was in the pre-GEF period. an atmosphere in which the renewable technology can be competitive through energy pricing reform and 239. With regard to supply-side management in gen- other energy policy reforms. In any effort to encourage eral, no data could be obtained on the pre-GEF Bank a transition to less reliance on fossil fuel for energy, this lending. Although the Bank has financed projects for aspect of the Bank's energy lending strategy would improving the efficiency of district heating in Eastern need to be given much greater emphasis. The team Europe and China in recent years at a cost of $350 found no evidence that the Bank has made this objec- million, it is not possible to make meaningful compari- tive part of its energy lending strategy. 1u "World Bank Pipeline of Renewable Energy Projects (FY98-00)," submitted to the study team by the World Bank GEF Coordinating Unit. Institutional Roles and Relations 43 243. The Bank has, thus, maintained roughly the same Extent and Quality of Integration of Global Environ- level of lending for biodiversity in its regular portfolio mental Concerns into Sectoral Lending Strategies as in the "pre-GEF" period. Regarding climate-related projects, it is lending many times more annually in the 247. The Bank's primary mechanism for integrating GEF period for end-use efficiency than it was in Lhe global environmental concerns into sector lending op- previous period. Renewable energy lending, however, erations is the country economic and sector work pro- has fallen compared with the pre-GEF period. gram undertaken with the borrower, which is supposed to provide analytical frameworks for evaluat- Incentives to World Bank Staff to Encourage or Man- ing development strategies and donor assistance activi- age Projects with Global Environmental Benefits ties. Ideally, the sectoral component of this program, based on the supporting analytical work already done 244. One issue regarding incentives for Bank staff is by the Bank, would always include a thorough analysis whether the budget for task managers for GEF projects of how existing management of energy resources and and the continuity of task managers was on a par vwith biodiversity affects the long-term sustainability of the regular Bank lending projects. The World Bank Coor- economy as well as the global environment. And it dinating Unit indicates that during the Pilot Phase, would identify opportunities for promoting both de- GEF was treated "like second-class citizens." The prob- velopment objectives and global environmental ben- lem was raised by the coordinating unit with regional efits in loan projects to be included in the Bank's management, and a major improvement in regard to lending strategy to the country and for the policy these indicators occurred during GEF 1. A survey done dialogue with the government. by a World Bank task force in 1996 indicated that most GEF task managers were satisfied with their budget 248. Such systematic integration does not appear to and would be happy to be a GEF task manager again. take place, nor did the study team find evidence of any strong impetus toward it. The Bank's Operational 245. Another problem for the World Bank is the fail- Policy on Economic Evaluation of Investment Opera- ure of Bank management to recognize and reward tions states that global externalities should be identi- work on GEF as equal in importance to its regular fied in sector analysis.4' But in practice it has remained business. GEF projects are much smaller than regular a low priority. As the Bank's administrative budget has Bank projects but are often equally or more comflex shrunk in recent years, country departments are under and challenging. Yet the Bank's evaluation systeni is strong pressure to produce more projects with less not set up to give equal recognition to GEF managers. staff time and money. One consequence is that country When asked about the system of incentives with re- sector work, which had once been a relaLively large gard to work on GEF, Bank regional coordinators ir.di- part of the work program, now receives fewer re- cated that it is difficult for management to recogrize sources and less time, and it has been even more work on GEF projects as much as on regular projects difficult to increase the attention given to global envi- that are many times larger. ronmental concerns. 246. Furthermore, country department management 249. The Global Overlays Program, launched in 1996 has no incentive to focus on opportunities for GEF or by the Bank's Environment Department, shows how global environmental benefits when they are under and at what cost policies and investment priorities pressure to produce higher volumes of loans on a would change if global environmental objectives were smaller budget. According to Bank staff, the transfer of added to conventional sectoral objectives. The overlay budget and staff to new country directors, which be- for a given country and sector explicitly identifies gan in 1995, has led to a significantly greater preoccu- "win-win" opportunities for protecting the global envi- pation with traditional Bank business-first in Afiica ronment, while advancing national development strat- and then in other regions. These pressures constitute egies. It also points to activities for global benefits an additional disincentive for country directors to give whose incremental costs would be appropriate for GEF GEF the same attention as traditional Bank operations. funding. The program has produced guidelines for "' World Bank, Environment Department, Global Environment Division, Mainstreaming Biodiversity in Development, Environment Department Papers No. 029 (November 1995), p. 20 and footnote., p. 23. 44 Study of GEFs Overall Performance climate change overlays; three of these have been com- exchange earner made no reference to the potential pleted, and more climate and biodiversity overlays are threat to marine biodiversity. In another, the CAS calls being prepared. for adding power generation capacity but contains no reference to the need for development of alternative 250. Despite their potential value for making sectoral energy. And, in a third, the CAS refers to a possible lending strategies more responsive to global environ- loan for biomass power but fails to note any relation- mental objectives, however, the global overlays pro- ship with climate change. One CAS fails to refer to the gram has not yet had significant impact on sector country's importance to global biodiversity conserva- analysis in the regional offices. Several obstacles to tion. their widespread use by those who make decisions on sector analysis still remain to be removed, according to 254. This sample suggests that neither the global envi- Environment Department staff. The main problem is ronment nor GEF have yet been integrated systemati- that the program has not had an adequate budget. It is cally into the CAS process. The most glaring weakness coordinated by a person working on a less than half- in integrating environmental issues into the CAS ap- time basis and has too few resources to be effective in pears to be the failure to note linkages between sectoral creating demand for global overlays on the part of loan strategies and global environmental concerns or regional management. Many managers in the regional between GEF programs and strategies, particularly in offices are not yet sufficiently acquainted with the climate change. The study team found that climate is global overlays program, and more needs to be done to completely absent from discussions of energy sector help them understand it clearly. and infrastructure issues in the CAS. 251. Country assistance strategies (CASs) are docu- 255. According to interviews with Bank staff, in the ments that formalize the Bank's lending strategy for the vast majority of cases the CAS is based on sector next three years. They are the basis for the Bank's analysis in which the global environment is weak or policy dialogues with client governments and the main absent. Moreover, government National Environtasens- vehicle by which the executive board reviews the tal Action Plans and other environmental strategies, on Bank's assistance strategy in a borrowing country. which the CAS process also relies, seldom identify and They reflect the views of the Bank as well as of the examine the shortcomings of government sector poli- borrowing government on investment priorities and cies and their impact on biodiversity loss and climate lending strategy for the country. change.42 And the CAS teams seldom request the help of environmental specialists, which would require that 252. The study team examined the CASs for the ten money be spent from tight budgets. In addition, there countries it visited. Eight of the CASs were finished in is no mandate from Bank management to integrate the 1997, one in 1996, and one in 1995, which was up- global environment into the CAS. Bank procedures for dated in 1996. The team found that fewer than half of the CAS provide that global environmental issues and them referred to World Bank GEF projects either in the role of GEF are to be discussed only "when appro- specific or generic terms and that nearly half of them priate." make no reference at all to GEF. Only two of the ten link renewable resource problems in the country to the 256. The study team also looked at a third aspect of global issue of biodiversity loss, and none link the integrating environmental concerns into sectoral lend- energy sector with climate change, despite Bank loans ing strategies-the elimination of loans that contribute involving power generation. to environmental degradation. Tl-he Bank has an Opera- tional Policy on Environmental Assessment that re- 253. In a few cases, the failure of the CAS to make quires systematic screening of all projects for their such linkages was particularly striking. In one case, the impact on biodiversity and prevention or minimiza- discussion of Bank support for tourism as a foreign tion of adverse impacts. In recent years, environmental '_ Stefaro Pagiola and John Kellenberg with Lars Vidaeus and Jitendra Srivastava, Mainstreaming Biodiversity in Agiicultural Development: Toward Good Practice, World Bank Environmental Paper No. 15 (Washington, D.C.: 1997), pp. 24-25. -3 The WVorld Bank, Environment Department, Land, W07ater, and Natural Habitats Division, The Impact of Environtnental Assessment: The World Bankds Experience (Washington, D.C.: November 1996). p. xv; Robert Goodland, World Bank staff, private communication. Institutional Roles and Relations 45 assessments have become more systematic and have procedure represents a positive development. How- taken place earlier in project design and preparation ever, the new policy explicitly rules out rejecting a loan than when they were in the 1989-92 period; the result on the basis of its impact on the global environment. is that project design is usually influenced positively. But the actions required by the environmental assess- 260. The World Bank's Global Environment Coordi- ment are often defined in the staff appraisal repcrts nation Division defends this policy by arguing that the and project agreements too generally to be effective. climate change convention does not permit the Bank to This problem is often undetected until mid-way "force" a country to accept a higher cost alternative on through implementation or even later.43 the ground that it has lower global impacts. It argues that rejecting any loans for fossil fuel power projects 257. In 1995 the Bank adopted a new policy of not on global environmental grounds would be inconsis- supporting any project that would result in the signifi- tent with the FCCC, because the agreement does not cant conversion or degradation of natural habitats, require non-Annex 1 countries to control their green- provided that the habitat is officially designated as house gas emissions.46 But, no language in the FCCC critical. But the policy allows conversion even of such forces the Bank to approve any specific type of loan; critical habitats if there are no feasible alternatives, if the Bank has not acted in the past on the assumption the environmental assessment demonstrates that ben- that it is obligated to approve whatever energy sector efits substantially outweigh the costs, or if acceptable loan is cheapest for its clients. The Bank has estab- mitigation measures (usually compensatory protected lished a wide range of environmental conditions on areas equal to the habitat) are implemented. The study lending in the energy sector, including narrow limits team was unable to obtain any data on how often such on the type of coal projects it finances, stringent re- conversion has taken place. quirements for reducing sulfur dioxide and other pol- lutants and a complete prohibition on nuclear power 258. The World Bank's conventional power project projects, against the wishes of client governments, be- portfolio has obvious implications for emission of cause such environmental conditions increase the greenhouse gases. The Bank has approved 170 loans in costs of power generation for the borrower. the electric power sector since 1990, totaling more than $24 billion, mostly for countries that will :not 261. The team recognizes that a transition from the have to reduce their greenhouse gas emissions in the Bank's traditional role in financing conventional power next decade .44 These loans will result in the emission of fossil fuel power projects to a new role in financing an estimated 10 billion tons of carbon in the projects' sustainable energy cannot be accomplished swiftly or lifetimes.45 easily. And any change in the present policy will re- quire political decisions by the major donor countries 259. The Operational Policy Committee approved. in represented on the Bank's executive board. But the November 1997 a recommendation in the Environ- team believes that continued financing by the World ment Department's draft energy and environment Bank for such projects is inconsistent with policy paper that task managers run their net present mainstreaming of the global environment in the Bank's value calculations on fossil fuel loans both with and regular operations. without a $20 per ton of carbon emitted shadow price for the global externalities associated with fossil fuel Programming on the Basis of Global Environmental use. If the value drops significantly with the shadow Objectives price included, this would signal that the proposed project will have significant global environmental im- 262. Global environmental programming would re- pacts and that alternatives should be considered. This quire setting aside a substantial portion of total lending 4 See Hagler Bailly, Stockholm Environment Institute, and IIEC, The Effect of a Shadow Price on Carbon Emissions in the Energy Portfolio of the Bank: A Backcasting Exercise, Final Report to the Global Climate Change Unit, Global Environment Division, WNorld Bank (lune 13, 1997), p. 1-1. " See Institute for Policy Studies and International Trade Information Service, The World Bank and the G-7: Changing the Earth's Climatefor Business, at http://wvw. igc. org/ifps/publicat/wTb-g7-reportl/exec utive summary.en.html. 56 For an early statement of *he Bank's position on "consistency" with the FCCC, see World Bank, The World Bank and the UNJ Framework Convention on Climate Change, Environment Department Papeis, no. 008 (Washington, D.C.: March 1995), pp. 4-5. 46 StucdsV of GEFs Overall Peiformance for global environmental objectives and inviting coun- does not keep statistics on investments by focal area or tries to submit project proposals that would meet eligi- investments with alleged global environmental ben- bility criteria. It would mean refocusing the Bank's efits, generally. Nor is IFC able to produce a complete corporate strategy on the production of global 'com- list of projects in either category. mons" benefits in sector lending and setting program- matic goals for global environmental problems, such as 265. Mainstreaming by IFC in its non-GEF portfolio is the amount of forest to be brought under effective inhibited by the fact that even larger clean energy protected area management or greenhouse gas emis- projects are usually at or above the low end of IFC's sions to be reduced through development of renewable financing range ($20 million). Because most renewable energy technologies. energy and energy efficiency projects are too small for the agency to invest in directly, IFC established the 263. A policy paper drafted within the Bank in 1997 GEF-supported Renewable Energy and Energy Effi- proposed that the Bank enter into a "strategic renewable ciency Fund in 1996, designed to help finance the energy partnership" with GEF by allocating a significant smaller clean energy projects. portion of its energy lending to support development of renewable energy technologies, to which GEF would Conclusions add grant resources amounting to one-fourth of the total fund. According to the World Bank's Executive Coordi- 266. The study team found that the Bank has nator for GEF Operations, the strategic renewable en- mainstreamed the global environment effectively in ergy partnership was adopted in principle by the Bank's terms of cofinancing and leveraging resources in con- Operational Policy Committee in November 1997, and junction with GEF projects. However, it has not done a task force is now being convened to formulate recom- as much to build up its regular loan portfolio with mendations on how the partnership would be struc- regard to biodiversity or renewable energy as it could tured. Still to be determined is how much the Bank have with the necessary commitment and resources. It would commit to the partnership and whether the Bank has not created all the staff incentives necessary to put would establish a special fund or would simply set a global environmental concerns on a par with tradi- target for lending for renewable energy. The study team tional bank business. The Bank has not succeeded in believes that this partnership could be a significant first systematically integrating global environmental objec- step by the Bank to mainstream the global environment tives into economic and sector work or into the CAS through global programming. process, nor has it taken meaningful action to reduce the impact of its traditional role as financier of fossil MAINSTREA.MING IN THE INTERNATIONAL FINANCE fuel power development. And it has not yet under- CORPORATION taken any programming based on global environmen- tal objectives, although it appears to be poised to take 264. Another member of the World Bank Group, IFC an important step in that regard. Overall, the team is the largest multilateral source of loan and equity found that, although the World Bank's cofinancing of financing for private sector projects in the developing GEF projects is a significant accomplishment in world. Apart from its management and cofinancing of mainstreaming the global environment, it has fallen GEF projects, it appears that IFC has begun to put well short of its potential for mainstreaming. increased emphasis on projects with global environ- mental benefits in recent years, particularly in the Recommendations climate focal area. It has already approved financing for a small run-of-the-river hydro project in Nepal and 267. The World Bank should adopt public, measur- is close to approving financing of a wind power project able goals for the integration of global environmental in Costa Rica. Other projects related to the global objectives into its regular operations, including goals environment, including ecotourism projects, are now related lo: 1) staff incentives, 2) funding level and/or in the pipeline. IFC also asserted that global benefits number of GEF associated projects, 3) funding level can arise from IFC investments not explicitly intended and/or number of projects for the global environment to benefit the global environment, such as elimination in its regular lending portfolio, and 4) integration into of natural gas flaring in oil and gas investments. The its sector work and the Country Assistance Strategy study team could not assess the degree of change in (CAS) process. It should report regularly to GEF and to IFC emphasis on such projects, however, because IFC the public on its progress in achieving these objectives. Institutional Roles and Relations 47 268. The World Bank should begin a transition from UNDP projects its role in financing conventional power loans to a new * Extent of integration of GEF and the global environ- role in financing sustainable energy technologies. mental concerns into country cooperation frame- works or other country dialogues. 269. The World Bank should allocate increased finan- cial resources to the Global Overlays Program in order Financing of GEF Projects and Association of GEF to ensure adequate staffing for a substantially higher Projects with Non-GEF UNDP Projects level of integration of global environment into sector work and the CAS. 273. UNDP mobilized some cofinancing in 42 percent of its GEF projects during GEF 1. This represents a 270. The IFC should maintain a database of its major improvement of its performance in generating projects with global environmental benefits, so that its cofinancing during the Pilot Phase, when such mainstreaming of global environment can be assessed cofinancing is provided in only 14 percent of its GEF in the future. projects.7 MAINSTREAMING IN UNDP 274. With regard to direct cofinancing from its core budget, UNDP provided S15.6 million to GEF projects 271. UNDP is a grant-making institution focused pri- during GEF 1, whereas it provided no cofinancing to marily on poverty eradication and promoting sustain- GEF projects from its core budget during the Pilot able human development. It allocates its development Phase. resources to developing countries on the basis of ob- jective factors, such as population and per capita in- 275. UNDP claims total cofinancing in full GEF come, so most of its funds go to the least developed projects of $213.5 million during GEF 1, which would countries. UNDP has a decentralized system of project account for 48 percent of the total financing (including planning: UNDP country offices have authority to pro- GEF financing) of UNDP GEF projects. However, the gram the funds allocated to the country over a three- study team found discrepancies between figures pro- year cycle (changed from a five-year cycle in 1996). vided for specific projects in its data sheet on UNDP/GEF projects represent approximately 7 per- cofinancing and the project documents.48 Taking these cent of UNDP's annual budget of about $1.1 billion. discrepancies into account, the study team found that the actual cofinancing total for UNDP GEF projects is 272. The study team identified the following criteria $195.5 million. Moreover, the study team found that as most appropriate for assessing the degree of in a number of UNDP GEF projects, cofinancing by mainstreaming in UNDP: governments is for baseline activities that would have been funded regardless of the GEF projects in question. * Extent of UNDP financial contributions to G,EE projects and of financing non-GEF projects associ- 276. UNDP committed itself at the Heads of Agency ated with GEF projects Meeting in 1996 to "integrate the new UNDP program- * Number and total funding of projects in UNDP's regu- ming cycle to the GEF work program to produce more lar portfolio that provide global environmental ben- projects benefiting from joint financing by UNDP and efit in the four focal areas other donors."4" UNDP figures for the past three years * Incentives and rewards for UNDP staff work on GEE do show a significant increase in financing for GEF projects compared with those for work on regular projects from other sources. UNDP GEF projects ap- '7All figures cited for UNDP cofinancing are based on data supplied by UNDP in "Cofinancing in UNDP/GEF Projects Operational Phase as of FY97,' submitted by UNDP on October 3, 1997, and "UNDP/GEF Pilot Phase Co-financing Projects" (n.d.). 4 UNDP claims a total of $27 million in cofinancing for the Madagascar Environment Biodiversity Program on its cofinancing data sheet, but the regional coordinator confirmed that the total cofinancinrg for the UNDP-managed components of the project was $6.7 million. And the $5.4 million claimed as cofinancing for the Republic of Yemen Socotra Archipelago Project is identified in the project brief as "parallel financing" for regular development activities from various U.N. agencies, including UN-ICEF and WHO, which would have been spent regardless of the GEF project. The study team notes that such ongoing financing of developrment activities is sometimes counted as cofinancing in UNDP project briefs and data sheet and sometimes not. 4 GEF, GEF Corporate Business Plan FY98-00, . cit., p. 15. 48 StudY of GEFs Overall Performance proved in 1995 had financing from governments, cycle beginning in 1992 was obviously a major oh- NGOs, and other funding entities of only $24.6 mil- stacle to progress in this regard, but UNDP's under- lion, whereas those approved in 1996 and 1997 had standing of associated projects is a more fundamental financing from other sources of $88.3 million and problem that must be addressed. However, the team $66.4 million, respectively. notes that the GEF Council has not provided clear guidance on what constitutes an associated project, 277. A second form of cofinancing of GEF projects is and that some confusion is to be expected under those the financing of an associated project. The team found circumstances. only three cases in which UNDP identified projects as 'associated projects." Moreover, UNDP's use of the 281. The team believes that there is considerable po- term "associated project" in project documents and in tential for UNDP to generate interest on the part of its comments on an earlier draft of this report indicates recipient countries in GEF-associated projects by using that UNDP was unclear about the term's meaning dur- the additional grant money from GEF as an incentive iIng GEF 1. for such associationis. Success in this effort will de- pend, however, on the degree to which global environ- 278. In the case of the Yemen Socotra Archipelago, mental concerns in general and GEF in particular are UNDP referred to the "Government of Yemen Trans- integrated into the planning of country programming, port Development for Socotra Project as an "associated which is addressed separately below. The improve- project." But that regular UNDP project has little or ment by UNDP of coordination between energy nothing :o do with biodiversity conservation and sus- projects funded with core resources and GEF-financed tainable use. And in the case of the Viet Nam Creating energy projects-one of the objectives of its "Sustain- Protected Areas for Resource Conservation project, able Energy Global Programme"-is obviously one UNDP listed all UNDP and GEF projects in Viet Nam prerequisite for achieving an adequate level of associ- related to biodiversity or environmental awareness as ated projects. associated projects. Funding of Non-GEF UNDP Projects That Provide 279. UNDP argues that the baseline costs of GEF Global Environmental Benefits projects are the equivalent of regular UNDP projects that are linked with GEF grants, which provide the 282. Statistics on UNDP's regular portfolio of projects global environmental benefit and are, therefore, '"asso- show that UNDP still does not have a system to track ciated projects." The study team believes this argument its funding of biodiversity conservation projects.50 represents a misunderstanding of the concept of asso- Therefore, the study team was unable to determine the ciated projects. The team assumes that GEF-associated pattern of spending over recent years in this area. The projects are those that either are closely related to a absence of any statistical tracking of biodiversity GEF project (blended with it or complementing it) or projects or any new initiative to increase project fund- that involve a change in the design of an otherwise ing for biodiversity conservation suggests that there unrelated project that is intended to benefit the global has been no new emphasis on biodiversity in the environment. Defining associated projects to mean a UNDP portfolio since the creation of GEF. project involving only baseline activities that are not altered because of the association with the GEF project 283. The data show that UNDP has reduced the num- would deprive the concept of any value in leveraging ber of projects and total funding for new and renew- additional funding related to the global environment. able energy since it began tracking that subsector of energy projects in 1993. From twenty-two prolects for 280. Based on this definition, the study team found a total of $22.6 million in 1993, renewable energy as a that UNDP has not yet begun to mainstream with category fell gradually to only eleven projects for a total regard to associated projects. UNDP's five-year project of $5.1 million in 1996.51 " Documentation and Statistics Office, Bureau for Programme Policy and Evaluation, United Nations Development Programme, Compendium of Ongoing Projects, UNDP/Series A/Nos. 22-27, 1992-96. UNDP informed the study team in January 1998 that UNDP is changing its project classification scheme but did not indicate whether it would begin tracking biodiversity projects under the new system. 91 Ibid. Institutional Roles and Relations 49 284. UNDP project statistics indicate that in fiscal events for UNDP and government counterpart staff. So 1997 UNDP continued to provide four times mere far, more than thirty countries have participated in such grant funding for "conventional sources of energy (Fe- events. Third, core resources are being used to support troleum, coal, and gas)" than it did for "new and project identification and design, pilot activities, and renewable sources of energy."52 UNDP commented resources mobilization for sustainable energy projects in that assistance for "energy planning and conservatiorn," at least thirty countries, according to UNDP's deputy for which funding was one-third higher than for con- executive coordinator. ventional energy sources, also includes projects related to renewables. However, it is impossible to tell frcm 288. These changes should give UNDP the capacity to project statistics how much of that category was for leverage shifts in its regular portfolio toward many more promotion of new and renewable energy. new and renewable energy projects during GEF II. The study team notes, however, that biodiversity protection 285. Commenting on the decisions made early in the has not received comparable attention during GEF 1. 1992-96 program cycle, UNDP's Energy and Atmo- sphere Program acknowledged that the overall decline Integration of GEF and Global Environment into in regular UNDP program funds and availability of Country Cooperation Frameworks GEF funding for climate change projects had causecL a "noticeable tendency within UNDP to give lower prior- 289. Closely related to the degree of mainstreaming ity to funding energy projects under the regular IPF by UNDP through associated projects and project programme," which it noted was "counter to the spirit funding in its regular portfolio is the integration of the and intention of GEF."53 global environment into the Country Cooperation Framework (CCF) process. The CCF presents the de- 286. These patterns and trends on energy projects in velopment priorities agreed to by the country and UNDP's regular portfolio reflect the priorities deter- UNDP and the strategy for addressing those priorities mined in 1992-93, when core funds were committed through projects over three years. It provides an op- to projects for the fifth five-year cycle (1992-96). portunity for UNDP to integrate global environmental UNDP had little flexibility to reprogram funds during concems into their cooperation with client govern- the final two years of GEF 1, when mainstreaming was ments and to align their strategies with those of GEF. discussed with GEF. The allocations among categor:.es UNDP's response to the GEF Secretariat's inquiry of projects, including environment and natural re- about ways that the agency had mainstreamed the source management, within country programs are rLe- global environment during GEF 1 specifically referred gotiated both between UNDP resident representatives to "ensuring that, in the current process, GEF opera- and their country counterparts, on the one hand, and tions are part of the Country Programme Cooperation among recipient government agencies, on the other Framework." The CCF process is an opportunity to hand, and are, therefore, difficult to reopen. identify UNDP projects related to biodiversity or cli- mate change that could be linked with GEF projects, as 287. UNDP has taken some key steps that should make well as possible core UNDP projects that would have it possible to make a dramatic shift in the project port].o- both global and national benefits. lio toward a much greater emphasis on new and renew- able energy: First, UNDP has adopted a three-year cycle, 290. The study team assessed the extent to which GEF which is no longer "front-loaded" but is a rolling project operations were integrated into CCFs by examining approval and implementation process that allows fo:r a the frameworks that were available for thirteen of the major shift in the energy portfolio to take place progres- sixteen countries visited by the team or for which sively in the next several years. The first such three-year country studies were done by local consultants. Nine cycle began in 1997. Second, UNDP has introduced the of the thirteen were completed in 1997, three in 1996, Initiative for Sustainable Energy, a policy document that and one in 1995. The team looked for indications of serves as the basis for national and regional training the extent to which the CCFs identified opportunities 52 UNDP, Compendium of Ongoing Projects as of 31 December 1996, Series A/no. 27, p. 43. 53Energy and Atmosphere Programme, United Nations Development Programme, UNDP Initiativefor Sustainable Energy (New York: June 1996), p. 75. 50 Study of GEF's Overall Performance TABLE 5. REFERENCES TO GEF IN A SAMPLE OF CCFS References to Refers to GEF Only Refers to GEF Refers to Linkage between GEF Country As Source of Funding Programs or Priorities UNDP Project and GEF Project Russian Federaton (1997) 1 Egypt (1 997) l Brazil (1997) i Indonesia (1995) __ India (1996) V China (1996) V Poland (1996) Zimbabwe (1997) _1 Mexico (1997) Jordan (1997) V Argentina (1997) V Viet Nam (1997) .1 Philippines (1997) ./ for projects relating to biodiversity, climate, or intema- shown in summary form in table 5 below. The team tional waters either independent of GEF funding or found that, in most cases, the CCFs refer to GEF only separate from but linked to GEF projects. in the "Resource Mobilization Target Table" for the planning period covered by the document or in a 291. In general, the team found that the CCFs intro- passing reference as a source of financing for UNDP dcuced broad themes re]ating to the global environ- projects. Only three of the thirteen CCFs referred to ment, sometimes stated in extremely general terms, GEF objectives directly or indirectly. And in only one such as 'conservation and use of biodiversity" (Argen- case was any linkage between a non-GEF UNDP tina), and sometimes in slightly more concrete terms, project and a GEF project made. Only one CCF re- such as "implement biodiversity and conservation ferred to a UNDP project as a GEF project. And none of measures for important wetlands and wildlands" (Jor- the documents foreshadowed the association of GEF dan) or "promotion of the use of renewable energy" grants with UNDP grants in one of the focal areas. (Egypt). But the CCFs seldom went beyond this gen- eral level of program objectives to identify specific 293. Based on this sample, it appears that the CCFs types of projects to be developed during the planning have given greater prominence conceptually to global period. There are some exceptions to this general pat- environmental issues in country program planning. terni: the Russian Federation CCF was specific about But the study team could not ascertain the likelihood types of projects contemplated and even project sites, that any of them will generate an increase in core- and the India and China CCFs were more concrete funded UNDP projects relating to the global environ- than most. But for the most part, the CCFs appear to ment. The team found that, although some CCFs have reflect a stage of planning in which it is too early to referred to GEF priorities and programs, they have not identify opportunities for linkages between core bud- yet systematically begun to link GEF's operations with get projects and GEF projects or even levels of alloca- regular portfolio projects. Indeed, most of the CCFs tion of core resources to different types of projects. ignore GEF except as a source of funding for UNDP projects. This may be a result of having been written 292. The team analyzed the ten CCFs in terms of how too early in the planning process. The question arises, they treated GEF and GEF projects in relation to therefore, whether these documents could be written UNDP core projects. The results of this analysis are somewhat later in the process and be explicitly de- Instituitional Roles and Relations 51 signed to identify specific core projects related to taken steps that give it the capacity to increase dramati- biodiversity, climate, and international waters. cally the role of renewable energy in its regular project portfolio, although biodiversity does not appear to Staff Incentives for Work on GEF Projects have been given parallel emphasis. UNDP has adopted a set of positive incentives for staff work on GEF 294. Generally speaking, UNDP does not have the projects, although Latin America may be a weak point same problem in rewarding work on GEF projects as in that regard. The CCFs have begun to refer to GEF the World Bank, because regular UNDP projects are projects and programs but have not yet systematically usually in the same range of cost as GEF projects. So integrated global environmental concerns into lending working on GEF projects is not given less recognition strategies. And the lack of clarity in UNDP about asso- in most UNDP country offices. This problem does ar.se ciated projects indicates that there are still institutional in Latin America, however; many regular UNDP obstacles to the mainstreaming of the global environ- projects are substantially larger there, with significant ment and GEF in UNDP's program planning. cofinancing by governments. Recommendations 295. According to UNDP staff, the agency intends to establish a system that will reward work on GEF by 298. UNDP should establish a system of tracking recognizing GEF project funding as leveraging of addi- projects and components that are relevant to the GEF tional resources. Thus, every time the Focal Point for focal areas and seL public, measurable targets related GEF in a UNDP country office has a project approved, to: 1) funding levels and/or number of core-funded the officer will leverage additional sources of financing, projects for biodiversity conservation, alternative en- which will be considered as one component in the ergy and intemational waters, 2) funding level and/or officer's performance evaluation. The incentive for number of GEF-associated projects, and 3) the Coun- working on GEF projects will, thus, be biggest in try Cooperation Frameworks (CCFs). It should report Africa, where there are the least non-GEF opportuni- regularly to GEF and to the public on its progress in ties for obtaining cofinancing from governments. achieving those targets. It should also consider making However, the new incentive system will not work in linkages between potential GEF projects and potential Latin America, where cofinancing opportunities are core budget project an explicit objective of the process numerous; it is precisely in Latin America that such of preparing the Country Cooperation Frameworks. incentives are needed. MAIANSTREAMiNG IN UNEP 296. As an additional incentive to work on GEF projects, UNDP, in coordination with the GEF Secre- 299. UNEP, unlike the World Bank and UNDP, is not tariat, offers training in logframe (logical framework) a funding agency and does not normally implement program development, which is considered advanta- country-level development-related projects. It has a geous for career advancement in UNDP, exclusively to budget approximately one-thirtieth the size of staff working on GEF projects. It appears that this LUNDP's, and that budget has shrunk drastically in the incentive makes working on GEF projects at least as last few years. attractive as work on regular UNDP projects, if not more attractive, again except in Latin America, where 300. It is not reasonable to expect UNEP to be able to the incentives for working on GEF projects appear to provide cofinancing for GEF projects. The nature of be much weaker. LINEP projects is such that it is much more difficult to mobilize additional financing from other sources than Conclusions it is for the other Implementing Agencies. UNEP part- ners in the science and environmental communities 297. The study team found that UNDP had made generally do not have access to the resources of measurable progress in providing cofinancing for GEF sectoral and development agencies, and governments projects compared with the Pilot Phase. It found that are less willing to finance regional and subregional the coincidence of UNDP's five-vear project cycle and activities. The criteria for mainstreaming for UNEP the beginning of the GEF Pilot Phase made it extremely must be significantly different from those applied to difficult for UNDP to mainstream the global environ- the other two Implementing Agencies. ment in its regular portfolio during GEF 1. UNDP has 52 Study of GEFs Overall Performance 301. UNEP already has a mandate to focus on reduc- ers with GEF's objectives and procedures. The GEF ing global environmental threats. The study team, Secretariat found on a mission to UNEP headquarters therefore, assumes that UNEP is in fact giving suffi- in April 1996 that some UNEP staff who were prepar- cient attention to the global environment in its regular ing GEF project proposals were still unaware of the operations. Apart from this criterion, the study team Operational Strategy.54 believes that the most appropriate criteria for assessing mainstreaming in UNEP are the incentives provided by 306. Since then, UNEP has taken several initiatives to UNEP for its personnel to work on GEF projects and acquaint senior management, substantive units, and the extent to which UNEP has followed the principle regional offices with GEF's policies, procedures, and that GEF programming should be additional to operational guidelines, including a retreat for senior UNEP's regular program activities. management, workshops at headquarters and in all regional offices, and distribution of a manual on UNEP 302. With regard to personnel incentives, UNEP's GEF operations. GEF Core Unit has informed the study team that it has not instituted any special incentives for GEF work. 307. UNEP's familiarization efforts and consultations Furthermore, it has observed that overall there are with the GEF Secretariat have led to an improvement strong disincentives to UNEP staff becoming involved in UNEP's programming with regard to the in GEF matters, because of the complexity and dura- additionality requirement. During 1997 UNEP sub- tion of the process of project approval. mitted a larger number of proposals that are additional to UNEP's core program activities and otherwise con- 303. With regard to the additionality of its core man- form to GEF eligibility requirements than in 1996. date, one UNEP official observed that, in the early UNEP's proposal for Global International Waters As- phase of GEF 1, UNEP program staff looked on GEF as sessment, which should make a major contribution to little more than another source of financial support for future GEF programming in international waters, was programs that were being cut and that they sought approved for inclusion in the work program, as were funding from GEF for whatever they could not get fourteen Project Preparation and Development Facility funded elsewhere. During GEF 1, UNEP developed a (PDF) grants dealing with biodiversity conservation, number of project proposals that represented parts of its international waters, and ozone depletion. regular work program for which funding has been cut. 308. However, UNEP was still submitting proposals 304. In 1996 most of UNEP's proposals for regular in 1997 that were not consistent with any GEF Opera- projects (thirteen of eighteen) were not approved by tional Program and lacked sufficient evidence of coun- GEF for inclusion in the work program. Most of the try involvement. Specifically, the Pilot GEF projects were rejected because they were either not Informational Network Project and the Integrated En- recipient country focused or did not appear to be vironment and Socio-Economic Information System country driven. But in several cases, the reason given Project Proposals were viewed by the GEF Secretariat was that GEF cannot fund activities of intemational as agency driven and potentially funding existing ac- organizations that are supposed to be supported by tivities of UNEP. The submission of such projects for their regular budgets. Some of these proposals were inclusion in the work program suggests that the prin- resubmitted in slightly different form, despite the ciple of additionality had not been completely ac- secretariat's advising UNEP that the GEF could not cepted by UNEP, despite the awareness-raising efforts fund existing programs of agencies. that have been carried out. 305. The problem of pressure from program units to 309. The study team believes that greater efforts by promote their projects appears to have arisen because both the GEF Secretariat and UNEP are needed to of a widespread lack of understanding on the part of ensure that all relevant UNEP staff have a clear under- UNEP program officers of how GEF operates. Until standing of the requirements for eligibility for GEF 1996 only one or two officials staffed UNEP's GEF unit funding, including the principle of additionality to and little effort was made to familiarize program offic- core budget activities. 54IKen King, GEF Secretariat, M':ission to UNEP: Back-to-Office Report " (May 1, 1996) Institutional Roles and Relations 53 Conclusions short-term cost-effectiveness, long-term cost-effective- ness, or a combination of the two. The COP responded 310. The study team found that UNEP has not pTo- by calling for a mixed strategy. Although the Opera- vided any incentives for work on GEF projects and that tional Strategy emphasizes projects with a long-term it could devise some simple ways to improve the situa- impact on the problem, it embraces short-term mea- tion. It also found that UNEP has shown some im- sures as well. provement in submitting GEF project proposals that are consistent with the principle of additionality to 315. In its initial guidance to GEF in April 1995, the core program activities, but that further progress is FCCC COP called for primary emphasis on enabling needed in this regard. activities, such as planning and capacity building, to facilitate implementation of "effective response mea- Recommendations sures." It called for strengthening research and techno- logical capabilities of convention implementation by 311. UNEP should devise a system of staff incentivzs, developing countries that are parties to the conven- involving at least a revision of the staff evaluation tion. It further called for emphasis on improving pub- criteria, to give adequate consideration to GEF work. lic awareness of climate change and response measures and for financing formulation of national programs to 312. The GEF Secretariat and UNEP should devote address climate change issues and support their imple- more staff time and resources to upstream consultation mentation and agreed activities to mitigate climate not only in Washington but in Nairobi to ensure that change. These points were integrated into the eligibil- all relevant UNEP program staff have adequate guid- ity criteria for climate enabling activities. ance in formulating GEF proposals. 316. As a result of the guidance from the COP of the B. COOPERATION BETWEEN GEF AND THE FCCC, GEF has allocated some 10 percent of its re- CONVENTIONS sources for regular projects in the climate change focal area ($35 million out of $364 million) to short-term 313. As the institutional structure managing the finan- measures, wvhereas about 90 percent of the funding has cial mechanism for the Framework Convention on been allocated to long-term measures within the Op- Climate Change (FCCC) and the Convention on Bio- erational Programs.56 logical Diversity (CBD) on an interim basis, GEF is supposed to function "under the guidance [of], and be 317. At its second session, the COP of the FCCC accountable to, the Conferences of the Parties, which expressed concern about "difficulties encountered by shall decide on policies, program priorities, and eligi- developing country parties in receiving the necessary bility criteria for the purposes of the conventions."55 assistance from the Global Environment Facility," re- The study team has examined the two main dimen- ferring to operational policies on eligibility criteria, sions of the relationships between GEF and the two disbursement, project cycle and approval, as well as conventions: GEF's implementation of the guidanice the application of the concept of incremental costs. It issued by the two Conferences of the Parties (COPs) also expressed concern about difficulties of non-Annex and the effectiveness of GEF in funding enabling ac- I parties in obtaining funds for preparing their national tivities to support the implementation of the conven- communications. The COP called for "steps to facili- tions by countries eligible for GEF assistance. tate the provision of financial resources for implement- ing measures to mitigate climate change, including GUiDANCE ro GEF FROM THE CONVENTIONS "pragmatic application of [the] concept of incremental costs on a case-by-case basis." It also called for GEF to 314. As the GEF Secretariat began preparing the GEF "expedite Lhe approval and the disbursement of finan- Operational Strategy in 1995, it presented a report to cial resources" for non-Annex I countries preparing the first meeting of the COP of the FCCC, which asked their national communications. GEF response to this for guidance on whether the strategy should focus on guidance is assessed below. 5 Instrument for the Establishment of the Restructured Global Environment Facility (Washington, D.C.: 1996), paragraph 6, p. 7. 5 Data compiled by the GEF Secretariat. 54 Study of GEFs Overall Performance 318. Guidance from the CBD COP has focused on a guidance from COP II. These were revised in April number of "programme priorities." The guidance from 1997 to reflect the guidance provided by COP III. COP I of the CBD in 1994 had thirteen separate parts. The guidance from COP II covered national programs 321. The Operational Programs were still going and reports, the need for expedited procedures, public through revision when COP II guidance was issued. involvement, modalities of support for the clearing- The secretariat had planned originally to publish the house mechanism, support for general measures for final version in April 1997 but decided to delay publi- conservation and sustainable use and for in situ and ex cation until June to revise it to include mention, wher- situ conservation, and sustainable use of components ever appropriate, of the activities called for by COP III. of biodiversity. Guidance from COP III covered capac- A proposal on benefit sharing has already been drafted ity building for biosafety, assessment and monitoring by the secretariat in collaboration with the CBD Secre- (including taxonomy), and indigenous and local com- tariat; the two bodies are still in the process of reaching munities. It also covered support for activities on agri- consensus on a final version to be presented to COP IV cultural biodiversity (or agrobiodiversity), the in May 1998. In addition, the secretariat committed to clearinghouse mechanism, targeted research, aware- write policy papers and reviews on assessment and ness and understanding, and in situ and ex situ conser- monitoring, incentive measures, genetic resources, vation. It further reiterated earlier guidance on and indigenous and local communities. incentive measures, including compensation for op- portunity costs forgone by communities. And it asked 322. The issue of whether the COP guidance on GEF to collaborate with the CBD Secretariat in prepar- biodiversity should be translated into a new Opera- ing a proposal on "the means to address the fair and tional Program was debated among the GEF Secre- equitable sharing of benefits arising out of genetic tariat, the CBD Secretariat, and the Implementing resources.` Agencies for several months before the secretariat de- cided in early 1997 to issue a policy note explaining to 319. The approach adopted by the secretariat in re- the GEF Council how agrobiodiversity activities would sponding to the guidance of the CBD's COP was to use be integrated into the existing Operational Programs the existing framework of Operational Programs as on biodiversity. The COP's guidance on much as possible. It was concemed about the possible agrobiodiversity was extremely broad, referring to the proliferation of Operational Programs, which makes FAO's Global Plan of Action on Agriculture and Ge- programming of GEF resources more difficult. It was netic Resources as well as the COP's own multiyear also aware that the greater the change in the existing program, which involves six program components. framework required to implement a given COP guid- GEF had already explicitly included activities relating ance, the longer it would take to respond and the more to conservation and sustainable use of agrobiodiversity political support would be needed. Thus, the secre- in its Operational Programs in biodiversity before the tariat preferred to implement the guidance through COP guidance. However, GEF could not realistically enabling activities wherever possible or through revis- include all of the possible activities outlined in the ing the Operational Strategy where necessary, rather guidance within the scope of those Operational Pro- than adding a new Operational Strategy. grams, so the secretariat's policy note focuses on those activities that would be relevant to GEF's mandate and 320. The secretariat took advantage of drafting the capabilities.57 Operational Strategy and Operational Programs to in- tegrate priorities identified by the COP into those 323. The noLe indicates that thle role of GEF will be to documents before they were approved as a means of help remove specific constraints to sustainable use of responding to the guidance. The GEF Secretariat con- biodiversity important to agriculture. The note identi- sulted the CBD Secretariat and incorporated guidance fies three distinct GEF responses to the guidance: em- from COP I into the Operational Strategy before it was phasizing biodiversity concerns in applying the approved by the GEF Council in October 1995. The Operational Programs, revising the operational criteria secretariat also developed the Operational Criteria for for enabling activities, and encouraging Implementing Enabling Activities in June 1996 based in part on the Agencies to assist with country-driven, short-term re- 'A Fraenvworl foI GEF Activitles concemning Conservation and Sustainable Use of Biological Diversity Important to Agrculture,' draft (n.d.). Instiuttional Roles and Relations 55 sponse measures in agrobiodiversity and inclusion of believed was the slowness of the GEF Secretariat to pilot components and demonstration of techniques in provide support for the clearinghouse mechanism of project proposals. the CBD. 324. The secretariat's follow-up to the COP guidance 328. COP II requested that GEF "explore the modali- on capacity building for biosafety has taken the form of ties" of providing support to developing countries for approving a pilot project that covers (a) building capacity building in relation to the operation of the awareness, stock taking, identification of options, and clearinghouse mechanism. At a GEF Operations Com- development of strategies for biosafety in eighteen mittee meeting in May 1996, the CBD Secretariat pro- countries and (b) regional workshops open to all GEF- posed that the project matrix for enabling activities eligible countries. The project has been sent to the GEF should include something on the clearinghouse Council for final endorsement. mechanism, and it was agreed that the idea was sound. The Operational Criteria for Biodiversity were modi- 325. In the cases of some issues covered by COP fied in June 1996 to include participation in the clear- guidance, the secretariat had already approved inghouse mechanism as an eligible activity. projects that addressed the COP's concerns even be- fore the guidance was issued. In the case of taxonorny, 329. However, the GEF Secretariat did not include in the Costa Rica Biodiversity Resources Development the revised Operational Criteria the specific cost ranges Project, approved in June 1995, was intended to ccm- for participation in the clearinghouse mechanism, on plete an inventory for five major plant and animal the grounds that the CBD was still in the process of groups in Guanacaste Conservation Area and sur- designing the clearinghouse mechanism. After wide- rounding buffer zones as well as to develop hunman ranging consultations with the CBD Secretariat and capacity and institutional capacity for future taKo- several of the delegations most interested in the issue, nomic projects. The Inventory, Evaluation, and Moni- the GEF Secretariat presented its proposed modalities toring of Botanical Diversity in Southern Africa Pro ect for GEF assistance to capacity building in relation to was approved in April 1996 to build the capacity of the clearinghouse mechanism at the COP III in No- 102 professionals and support staff in ten countries to vember 1996. The COP requested that GEF inventory, evaluate, and monitor some 30,000 species operationalize the revised criteria as soon as possible; of flowering plants and ferns. in April 1997 the GEF Secretariat developed cost ranges for various hardware, software, and training 326. With regard to incentive measures, including costs for using the Internet as guidelines for preparing ways of compensating benefits forgone, GEF has r.ow enabling proposals. approved a project that specifically includes provision for compensating communities for benefits forgone in 330. The CBD Secretariat strongly believed that the conservation of biodiversity. In the Ghana Natural GEF Secretariat should have moved much faster on Resources Management and Biodiversity Project, ap- allowing countries to draw on enabling activities to proved in July 1997, communities are to be compen- participate in the clearinghouse, noting that it took sated through alternate livelihood activities for the more than a year to complete the task. The GEF Secre- benefits forgone by taking forest reserves out of pro- tariat, however, believed that it should receive the duction. guidance of the COP before making the decision, par- ticularly because the clearinghouse mechanism itself 327. The CBD Secretariat confirmed that the GEF Sec- had not yet been designed by the CBD Secretariat. retariat had generally integrated the guidance from the COP into the relevant GEF documents. Howeve:r, it 331. The study team notes that the apparent tentative- viewed the Operational Criteria for Enabling Activities ness of the COP's guidance, combined with the un- as designed primarily for the climate convention ra:her completed plans for the mechanism itself, was the than the biodiversity convention. Specifically, the CBD primary cause of the delay in acting on the issue of the Secretariat emphasized the much greater importance clearinghouse mechanism. to the CBD of the clearinghouse mechanism, intended to disseminate convention-related information, which 332. The larger problem in cooperation between GEF was not reflected in the Operational Criteria. The CBD and the conventions regarding the guidance provided Secretariat also expressed frustration about what it by the CBD is that guidance has been overly broad in 56 Study of GEFs Owerall Performance scope, yielding so many priorities that it tends to make 4.4 months and that many of them take two months or GEF programming more diffuse than focused. Ideally, less. From May 1996 to June 1997, GEF approved the CBD would provide GEF with a scientifically based forty-six climate enabling activities covering fifty-nine methodology for prioritizing among ecosystems. The countries. study team recognizes that this is politically unrealistic given the nature of the COP's makeup. However, it 337. By the time of the Kyoto meeting of the COP of would be desirable for the CBD's guidance to be more the FCCC, seven non-Annex 1 parties (Argentina, focused. Uruguay, Senegal, Mexico, Micronesia, and Zimba- bwe) had submitted their national communications to Conclusions the FCCC. All seven have received GEF grants for enabling activities. 333. The study team found that GEF has sought and strictly implemented the guidance of the conventions 338. As of January 1998, more than forty countries wherever possible. The team also found that the guid- that have received EAs had submitted their first na- ance provided by the COP of the CBD has been overly tional reports to the CBD, and more are expected by broad in scope and has not included guidance on the time of COP IV in May 1998. Some of these prioritizing GEF programming in regard to ecosystems reports, mostly from African countries, are 'interim` or ecosystem types. reports rather than complete reports, according to the CBD Secretariat, but the vast majority are complete. Recommendations 339. As early as 1996 the convention secretariats be- 334. The GEF should play a more proactive role in its lieved that many countries would not be able to com- relations with the conventions and should, in consul- plete their reports, even after receiving funding for tation with Implementing Agencies, prepare more de- preparing them, without more direct support. At the tailed requests for guidance on those issues on which October 1996 GEF Council meeting, the idea of a guidance would be most helpful. global support project for fulfillment of national obli- gations under the two conventions was discussed, and GEF FiNANCING OF ENABLING AcTviTiEs PDF Bs were drafted by UNDP in early 1997 for both biodiversity and climate. The PDF B for the "Global 335. GEF enabling activities (EAs) are intended to Support Program for Enabling Activities in build the capacity of recipient countries to implement Biodiversity" was approved in June 1997. It involves objectives of the biodiversity and climate conventions. hiring intemational consultants to provide direct ad- Activities supported in these projects include training, vice and support to officials working on biodiversity research, education, and institution strengthening for strategies and action plans and first national reports to preparation of national plans and strategies as well as the CBD. The support would take the form of work- first national communications to the two convention shops, a "hotline," and a "help desk." secretariats. In addition, because all non-Annex 1 par- ties to the Climate Change Convention, developing 340. A similar PDF B for a"National Communications country parties to the CBD, and economies in transi- Support Program" in regard to the FCCC was ap- tion otherwise eligible for GEF funding are entitled to proved in March 1997, and a full project proposal for a EA's. they are considered important to maintaining $3.6 million program is now under discussion with the broad global political support for the conventions. secretariat. It argues that such a support program is needed as "insurance" against the failure of recipients 336. As a result of the expedited procedures, by June of GEF climate enabling activities to deliver their na- 1997 the average elapsed time had been reduced to six tional communications. The UNDP staff working on months for climate EAs according to the FCCC Secre- climate EAs told the study team in June 1997 that as tariat.8 Data provided by UNDP show that the average many as thirty of the enabling activities might not time between receipt of the proposal and final CEO achieve their intended objective without further out- approval for its entire portfolio of biodiversity EAs is side help. Study team meeting with FCCC Secretariat, Bonn, June 16, 1997. Iastitutional Roles and Reittions 57 341. The CBD Secretariat asserted in an interview C. ROLES, RESPONSIBILmES, AND RELATIONS with the study team that the GEF Secretariat's response to the request for funding for a support program flor USING THE COMPARATIVE ADVANTAGES OF IMPLEMENTING national communications was too slow and inad- AGENcIES equate. The GEF Secretariat, however, has been skepti- cal about the alleged need for additional support. It 345. One of the underlying principles of GEF is using argues that models of how to write national plans for the comparative advantage of each Implementing biodiversity already have been widely circulated and Agency. The three agencies of the Pilot Phase signed an that the enabling activities are already supposed to agreement in November 1991 that identified their re- build the capacity to write the national reports. spective roles in GEF. When GEF was restructured, the three agencies agreed that they would revisit the ques- 342. The requests for substantial amounts of GEF tion of their respective roles at some future time. But funding for further assistance to countries in meeting the 1991 agreement was included as an annex to the obligations to the two conventions suggest that the EAs GEF Instrument. The agreement provided that each have not been as effective as anticipated and, in some agency would have its own "area of emphasis" within cases, may not be effective at all. Whether GEF furLds GEF: UNDP would be the primary agency for capacity these support programs or not, the future of enabling building and technical assistance, UNEP would have activities as a means of bolstering the two conventions the primary role in scientific and technical analysis and requires much more careful thought. environmental management, and the World Bank would be the primary agency for investment projects.59 Conclusions 346. This original understanding no longer appears to 343. The study team found that GEF has sought and be a meaningful way of distinguishing the relevant strictly implemented the guidance of the conventions strengths and appropriate roles for the Implementing with due regard for GEF's own mandate and funding Agencies. The World Bank has not limited itself to limitations. The team also found that the guidance infrastructure or investment-type projects for many provided COP of the CBD has been overly broad in years. Typically, World Bank projects include a range scope and has not included guidance on prioritizing of components, including technical assistance and GEF programming in regard to ecosystems or ecosys- support. Pure investment projects are found only in tem types. It found that GEF has made a major adjust- the ozone-depleting substances and climate focal ar- ment in procedures, which resulted in enabling eas. activities being funded rapidly during 1997 but that the enabling activities program does not appear to be 347. Meanwhile, UNDP has been implementing some as effective in achieving its objectives regarding na- projects in the climate focal area that are either invest- tional communications as anticipated. ment projects (defined as those that generate an in- come stream) or have an investment component." Recommendations Although these are small investment projects or com- ponents compared with those of the World Bank, the 344. The GEF Secretariat, the ImplementingAgencies, size of such projects is growing and UNDP is expected and the convention secretariats should undertake a to increase the number and size of investment-oriented comprehensive review of enabling activities before the GEF projects in the future. This development also has end of 1998 to determine how successful the projects created friction; the World Bank has expressed con- have been, analyze the reasons for those that have cern that UNDP's approach is too government oriented failed, and consider policy and programmatic re- rather than being attuned to the need to ensure that sponses to the problem. 5 Instntmentfor the Establishment of the Restructured Global Environmnent Facility op. cit., "Principles of Cooperation Among the Implementing Agencies," Annex D, pp. 30-3 1. 6 Includes Bolivia Energy-Based Rural Electrification, China Promoting Methane Recovery and Utilization from Mixed Municipal Refuse, Ghana Renewable Energy-Based Electricity, and Uganda Photovoltaics for Rural Electrification. 58 Study of GEFs Overall Peiforrnance GEF investment supports private sector initiatives. Meanwhile, UNDP has sought to preserve a special 351. Some of the most important comparative advan- niche in technical assistance within GEF, despite the tages of each Implementing Agency, therefore, may fact that the World Bank usually has technical assis- depend on both the country and the type of institu- tance components in its projects. tional process and policy issues involved in a project. These advantages cannot be easily formalized, nor 348. The World Bank clearly has the greatest expertise would it be advantageous to do so. on its staff with regard to investment projects, includ- ing economic expertise. But, although the Bank may 352. The blurring of distinctions among the Imple- still have a comparative advantage in implementing menting Agencies is an inevitable result of the kinds of large infrastructure projects, the three Implementing projects that have evolved in response to recipient Agencies are not so clearly differentiated in regard to country needs. It is not necessarily harmful to the most of the types of projects that GEF funds. The team mission of GEF. Indeed, it could result in greater notes that implementing Agencies hire consultants for responsiveness to country demands and greater effi- a wide range of activities involved in GEF projects, so ciency in project preparation if more than one agency the distinctions among agencies in regard to technical is capable of implementing the same type of project. capacity for project implementation have become The potential harm from the increased competition quite blurred. can be reduced through upstream consultations on project pipelines among the Implementing Agencies, 349. The blurring of the original tripartite definition which are already being implemented with positive of roles and responsibilities does not mean that the effect. Implementing Agencies do not have comparative ad- vantages in regard to projects. In many countries, the THE IMPLEMENTING AGENCY "MONOPOLY" ISSUE World Bank has a history of dialogue on policy reforms at the macroeconomic and sectoral levels and a will- 353. The subject of comparative advantage of the ingness to take tough stances in negotiating project three Implementing Agencies is directly related to the conditions to create the necessary sectoral policy envi- question of whether these three agencies should be the ronment for success of a site-specific investment only ones with the right to implement GEF projects. project. UNDP has the greatest in-country presence This issue has been raised by a number of NGOs and worldwide of the three agencies, in the form of resi- some countries, who believe that the present situation dent representatives in each country, and the broadest unnecessarily restricts access to GEF funds. It has not network of contacts. Moreover, UNDP is often viewed been clearly defined up to now, and it is unclear by recipient governments as a nonthreatening party whether a change in the present Implementing Agen- and, therefore, can more easily convene local stake- cies would be more likely to take the form of adding a holders to develop consensus on policy issues. specific set of agencies or of establishing criteria for Implementing Agencies that would leave the ultimate 350. UNEP's comparative advantage in GEF is its abil- number open ended. ity to catalyze scientific-technical analysis of global environmental problems. UNEP has the best links with 354. Assuming that both alternatives are to be consid- environmental agencies and scientific networks and ered, the team has identified several criteria as appro- enjoys particularly close working relations with some priate for the examination of this issue: African countries. Although UNEP has not tradition- ally undertaken national-level projects, it has executed * Would increasing access to GEF funds beyond the activities at the national level in support of regional existing Implementing Agencies increase the flow of and global projects. In GEF 1, UNEP has become project proposals to GEF and improve GEF program- heavily involved in enabling activities and has imple- ming? mented some country-level projects. The executive * Would opening the field to additional organizations director of UNEP has stated that the agency would increase transaction costs of project cycle manage- focus on international waters, global and regional as- ment? sessment in biodiversity and climate change, enabling * Would having more Implementing Agencies inevita- activities, and providing support to the Scientific and bly dilute the commitment of GEF to its ten opera- Technical Advisory Panel (STAP). tional principles for development and implementa- tion of GEF's work program? Institutional Roles and Relations 59 * Would greater competition among agencies enhance GEF now has in programming in climate and or diminish the effectiveness of the existing GEF biodiversity is that the GEF is getting fewer good operations within the Implementing Agencies? project proposals than it has the resources to support. * Would additional agencies be as accountable For The existing Implementing Agencies obviously have an project quality? interest in avoiding a situation in which its staff time is spent on developing project proposals that could be 355. Regarding the first issue of increasing access to rejected in favor of an alternative proposal. However, a GEF funds, the study team encountered complainlts heavier flow of high quality projects would be desir- from officials in Poland and China to the effect that able in terms of GEF programming goals, because it some types of projects or project components were would allow a closer fit with strategic objectives to be ruled out by Implementing Agency preferences. Chi- achieved over time. nese officials argued that the three agencies tended to reject proposals that did not match their own agendas, 358. The study team believes that opening up the regardless of GEF's operational strategy and prograrns. circle of Implementing Agencies would increase some They proposed that GEF should allow regional devel- transaction costs, because the GEF Secretariat would opment banks to be Implementing Agencies as well. have to consult with a larger number of agencies. Obviously, country-level officials do not want to have However, such a step would also reduce some transac- their project concepts rejected, and this argument can- tion costs, especially by increasing the competition not be regarded as entirely disinterested. But the argu- among agencies for GEF funds, which would tend to ment that the limited choice of Implementing Agencies make the agencies more efficient and more responsive is likely to narrow the range of projects that are funcded in regard to the project cycle. Although it is possible also cannot be easily dismissed. that allowing a wider range of agencies to implement GEF projects would reduce the incentive for task man- 356. NGO representatives presented a variant of this agers of the existing Implementing Agencies to work argument in their 1996 working paper on promoting on GEF project executions, that risk would be small if partnerships between GEF and the NGO community: the funds allocated to additional agencies were to rep- "Typically, [Implementing Agency] task managers are resent a relatively small proportion of the total. primarily responsible for ensuring that the large, mul- timillion dollar projects that are central to their basic 359. Regarding the commitment to operational prin- work programs are successfully executed. They have ciples, the experience of the past three years suggests little time and limited incentives to pay attention to the that it is likely to take a relatively long time for larger processing of small or mid-sized GEF projects that are agencies, such as multilateral banks, to adjust fully to not components of their basic work program."6' Al- GEF's operational principles. It would probably be less though the expedited procedures for medium-sized of a problem, however, for NGOs, which are already projects, which require less preparation than larger involved in international cooperation on the environ- projects, were intended to encourage submission of ment. smaller projects from a range of sources, they do iot resolve the problem that World Bank officials have an 360. In addition, on the issue of accountability for incentive to focus on larger projects. On the other project quality, the study team believes that the ability hand, UNDP often manages smaller projects, includ- of various organizations to provide such accountability ing those in the range of $50,000 to $100,000, in its varies greatly and that it is a legitimate criterion for regular portfolio, so this generalization does not ap- eligibility on becoming a GEF Implementing Agency. pear to apply to its incentive structure. However, the team believes that such accountability does not depend exclusively or even primarily on the 357. Apart from the issue of project quality, increasing having an intergovernmental governing bodies. It de- access to GEF funds would certainly have the effec, of pends primarily on the mechanisms adopted by the increasing the number of proposals that are submitted organization for screening project proposals and for to GEF for consideration. One of the problems that monitoring and evaluation of project implementation. 61 Promoting Strategic Partnership Between GEF and the NGC, ' onmmunity, Q2. cit. 60 Study of GEFs Overall Performance Conclusions 365. The management of the secretariat and that of the three Implementing Agencies agreed at a manage- 361. The study team found that increasing the num- ment retreat in July 1996 to a new procedure for ber of Implementing Agencies could result both in an project review, under which the secretariat would con- increase in the number of project proposals submitted sult bilaterally with each of the Implementing Agencies to the GEF and a broadening of their range. It also on the work program. It was agreed that these bilateral found that increased competition among Implement- consultations would "primarily address eligibility and ing Agencies would help reduce the transaction costs programmatic aspects of activities proposed for fund- of permitting additional organizations to be Imple- ing in light of GEF policies, operational strategy, and menting Agencies. Although there could be some operational programs." short-term sacrifice of commitment by the GEF family to its operational principles, depending on which or- 366. Secretariat and Implementing Agency respon- ganizations become Implementing Agencies, and some dents all agree that this shift has resulted in a reduction reduced incentive for existing Implementing Agencies in conflict among Implementing Agencies and more to work on GEF projects, these risks would have to be efficient use of time. However, the shift to bilateral weighed against the advantages. consultations has left UNEP feeling more marginalized, because it does not have joint upstream Recommendations discussions with UNDP or the World Bank. 362. The GEF Council should undertake a study of 367. Moreover, the shift from multilateral to bilateral the advantages and disadvantages of various ap- consultations has given much greater responsibility proaches to permitting additional organizations to than previously to the GEF Secretariat for analyzing propose GEF projects directly to the Secretariat and projects and determining whether they should be assume direct responsibility for GEF projects. cleared for GEF Council review. Implementing agen- cies have believed that the secretariat has sometimes SECRETARIAT-IMPLEMENTING AGENCY CONSULTATIONS ON screened projects not only for consistency with GEF THE WORK PROGRAM requirements but for issues of project quality-issues that they believe are outside the secretariat's proper 363. In the GEF Instrument, the role of the secretariat purview. is to "coordinate the formulation and oversee the implementation of program activities pursuant to the 368. Interviews with Implementing Agency partici- joint work program, ensuring liaison with other bodies pants indicate that the GEF Secretariat has often raised as required.""2 The secretariat has carried out this func- issues of technical detail that the Implementing Agen- tion through formal consultations with the Imple- cies believe fall within the responsibility of the Imple- menting Agencies, but it has the responsibility of menting Agencies themselves. Implementing agency advising the CEO on whether or not to include a participants generally concede that the GEF Secretariat project proposal in the work program of GEF. has a legitimate role to play in screening projects to ensure that they meet GEF eligibility requirements, are 364. The original mechanism for consultations on consistent with the strategies underlying the Opera- project proposals was the GEF Operations Committee tional Programs, and have correctly calculated the in- (known as GEFOP), which involved the GEF Secre- cremental costs of the project. But they are united in tariat, all Implementing Agencies, the convention sec- wanting the secretariat to avoid micromanaging the retariats, and STAP. Most participants agree that project preparation by the Implementing Agencies. GEFOP tended to create unnecessary conflicts among Implementing Agencies as well as between the secre- 369. The climate focal area has generated contentious tariat and the agencies. The secretariat believes that the issues in the bilateral process, primarily because of the GEFOP process encouraged efforts by one agency to problem of incremental costs in climate projects. gain the support of another agency for its proposals. World Bank coordinators and officials from the re- " Instrumentfor the Establishment of the Restructured Global Environment Facility, 2p. cit., Paragraph 21(b), p. 11. Institutional Roles and Relations 61 gional bureaus have complained that the GEF Secre- MECHANISMS FOR COORDINATION tariat has questioned their judgments on technical as- sumptions underlying incremental cost calculatio-ns. 373. Since the beginning of GEF 1, the secretariat and The secretariat argues, however, that it cannot carry Implementing Agencies have had to evolve a new set of out its responsibility for checking on these calculations mechanisms for coordination. These tools include without addressing the assumptions underlying the regular portfolio consultations among Implementing analysis, component by component. That, in turn, Agencies, focal area task forces, cross-sectoral task requires it to address the technical background of the forces, and the Executive GEF Operations Committee. project. In essence, the secretariat argues that in cli- mate projects, incremental costs cannot be separated Joint Pipeline Reviews from technical issues, which are, therefore, a necessary part of its project review function. 374. In 1995 the World Bank and UNDP instituted periodic joint portfolio reviews to avoid duplication 370. The management of the secretariat recognizes l he and competition in particular countries. At first, these need to focus bilateral consultations on broader strate- were carried out informally between regional coordi- gic issues and not on narrow technical issues or project nators. As more confidence was built in the process, quality. However, it is unwilling to give up the author- information on project pipelines was more fully ity to review projects for the quality of incremental cost shared. Interviews with regional coordinators suggest calculations because of the concern that, without such that the working relationship between the World Bank a secretarial review, incremental costs will creep up- and UNDP for pipeline reviews improved with the ward. replacement in 1996 of GEFOP meetings with bilateral consultations. In 1996 the process of joint pipeline 371. A consensus on the issue was registered in Lhe review by region was formalized by the two agencies' findings of a September 1997 GEF Retreat-that [he GEF coordinators. GEF Secretariat's role in project review should focus on incremental costs, eligibility, consistency with strat- 375. Implementing agencies agree that the joint pipe- egies, operational programs and policies, and long- line reviews have significantly reduced duplication of term portfolio development. That consensus strongly projects, which wras viewed as a serious problem by implies that the number as well as the detail of secre- World Bank task managers surveyed by a Bank task tariat comments on projects will diminish in the future force in 1996. When the reviews reveal a potential and that the transaction costs of the project cycle for duplication or overlapping of proposed projects, dis- Implementing Agencies should also be reduced. cussions at a higher level between UNDP and the World Bank have sometimes been required. In some Conclusions cases, the issue has been resolved by UNDP agreeing to let the World Bank implement the project. In others, 372 The study team found agreement among Imple- the two agencies have agreed to develop complemen- menting Agencies and the GEF Secretariat that the tary projects. In the Latin American region, for ex- secretariat's review of project proposals has in the past ample, the World Bank and UNDP agreed on often been overly detailed and focused on nonstrategic complementary projects on the Meso-American Bio- issues. However, it also found that the secretariat's logical Corridor and on the Argentina Patagonian review of incremental costs does require assessments Coastal Zone Management Plan. At the same time, of issues that would otherwise be considered the UNDP and the World Bank have also agreed to col- proper sphere of the Implementing Agencies. The dif- laborate on a growing number of GEF projects. These ferences between the secretariat and Implementing include renewable energy projects in China and Sri Agencies on the issue now appear to focus primarily on Lanka and biodiversity projects in Madagascar, Hon- the problem of incremental costs and technical details. duras, and Brazil and on the Red Sea. They have also The team concluded that attempting to define pre- collaborated on a PDF A for the Tanzania Eastem Arc cisely the scope of the secretariat's role in project re- Mountains Project. view may not be practical. 376. No broad joint pipeline reviews between UNEP and the other two Implementing Agencies have oc- curred yet at the global level. However, UNDP has had 62 Stttdv of GEFs Overall Performance informal consultations on GEF project pipelines at the ties, such as enabling activities, it became more formal- regional level in Latin America through UNEP's re- ized and more politicized. At times, it was chaired by gional office in Mexico. UNEP has proposed the estab- the GEF deputy CEO and attended by executive coor- lishment of regular trilateral review meetings, but the dinators rather than biodiversity specialists. And ef- World Bank and UNDP have not agreed. The World forts by the task force to have a joint pipeline review on Bank's GEF coordinating unit indicated that the Bank enabling activities in biodiversity were frustrated by does not feel the same urgency about joint pipeline differences on issues that had implications for an ex- review with UNEP that it feels with UNDP, because panded portfolio of such projects by UNEP. In 1997 UNEP does not have a mandate to implement cotntry- the task force began to discuss the issues of a possible based projects. operational program on agrobiodiversity and priorities in programming. Focal Area Task Forces 381. The international waters task force met four 377. Task forces were created in 1996 for discussion times between November 1996 and September 1997. of project, policy, and programming issues that arise in Unlike the other groups, this task force was not created the climate, biodiversity, and international waters focal initially to deal with enabling activities, nor has it had areas, usually by teleconference. Task forces are infor- any new operational programs to handle. Instead, it mal institutions without terms of reference or other was established explicitly to focus on strategic issues procedural guidelines, so the frequency of meetings related to the Operational Programs and the pipelines and the manner in which they have been conducted of the implementing Agencies in international waters. have varied across the three focal areas.63 Agency participants believe that it has been a valuable forum for discussing operational programs and eligi- 378. The climate task force was created primarily to bility requirements, providing, in effect, the upstream discuss and agree on the Operational Strategy and consultation on projects envisioned by the Procedures Programs in the focal area and on guidelines for en- for GEF Operational Programming issued in March abling activities regarding national communications to 1997. The task force has also conducted a pipeline the FCCC. Although the discussions focused on guide- review in light of operational program goals for the lines for the enabling activities, no final agreement was next three to four years. As a result of task force formalized and task force members report some confu- discussions of Operational Program number 10, which sion about what had been agreed; the GEF Secretariat had been largely inactive, two new project ideas within adopted a different understanding than the Imple- the operational program have been developed. menting Agencies. The differences were never resolved in the task force. Executive GEFOP 379. After its January 1997 meeting, the climate task 382. In early 1997, a new GEF Operations Committee force did not meet again for eight months. Implement- was established (often referred to as the Executive ing agency task force members were under the irnpres- GEFOP), comprising the assistant CEO (and, as neces- sion that task force meetings had been replaced by sary, the CEO), the coordinator and deputy coordina- bilateral consultations between the secretariat and the tor of each of the Implementing Agencies, the Implementing Agencies. The task force resumed meet- executive secretaries of the Convention on Biological ing in September 1997 and dealt with a wide range of Diversity and the Framework Convention Climate on programmatic issues. Change, and the chairperson of STAP. The primary purpose of this mechanism, as reflected in the "Proce- 380. The biodiversity task force was originally in- dures for GEF Operational Programming" document, tended to be ad hoc and informal to stimulate discus- is to discuss policy and strategic issues raised in pro- sion among the technical specialists on biodiversity. posed work programs and long-term issues in the But when the task force dealt with issues on which one portfolio. or more Implementing Agencies had political sensitivi- "'All projects in the ozone layer depletion focal area are short-term measures, and it has not been the subject of a focal area task force. Institutional Roles and Relations 63 383. Despite the desire of the Executive GEFOP to Agencies. The STAP proposal for the scope of the avoid dealing with project-specific issues, it has also Operational Programs in climate was accepted by the been called on to review a number of projects referred secretariat without any significant change. STAP's ex- to it by the GEF Secretariat, either because they raised pert workshops on the transport sector, clean coal, significant new policy issues or because disagreement renewable energy, and energy efficiency, and planning between the secretariat and the Implementing Agency for adaptation to climate change have made intellec- could not be resolved in bilateral consultations. The tual contributions on these issues. Executive GEFOP has also been preoccupied with the issue of operational procedures for bilateral consulta- 387. In the biodiversity area, STAP initially played a tions on work programs, on which Implementing relatively limited role in providing scientific and tech- Agencies have pressed for substantive changes. nical advice. However, the STAP workshop on land degradation contributed to the GEF framework for Conclusions land degradation projects. It also contributed to the work by UNEP, in collaboration with UNDP, identify- 384. The study team found that the coordinating ing six concepts for projects dealing with land degra- mechanisms that have evolved in GEF 1 have generally dation. Another recent STAP workshop on sustainable increased the level of coordination and collaborative use of biodiversity resources was regarded by Imple- thinking. The joint pipeline reviews have been suc- menting Agencies as a useful contribution. cessful in reducing duplication and competition in projects. The focal area task forces have already pro- 388. STAP also contributed to a more strategic, long- duced useful programmatic discussions on interna- term approach, advocating a "basinwide" concept of tional waters, whereas the biodiversity and climate programming that would link currently independent task forces have just begun to be used for that purpose. GEF projects operating in the same drainage basin, The Executive GEFOP, which is less than a year old, such as the Black Sea-Danube-Dnieper. STAP also ad- has only begun to move into broader operational vocated the development of a Global International policy coordination. Waters Assessment, analogous to the Global Biodiversity Assessment being implemented by UNEP. THE ROLE OF THE SCIENTIFIC AND TECHNICAL ADWSORY PANEL 389. STAP has recently conducted a survey of Imple- menting Agency users of the reviews by its roster of 385. STAP was given a mandate by the GEF Council at experts. The reviews by the STAP Roster of Experts its October 1995 meeting that focused on three main were found by the World Bank and UNDP regional functions: to give strategic, scientific, and technical coordinators to be extremely valuable as a tool for advice on Operational Strategies and Programs; to de- improving external review of project proposals. World velop and maintain a roster of experts to review indi- Bank task managers judged the quality of the reviewers vidual projects; and to provide objective scientific and to be high.4 Only 6 percent of the reviews were con- technical advice on the GEF portfolio and selective sidered inadequate. However, some gaps and weak- review and evaluation of projects. nesses in the roster have been noted, especially an overrepresentation of experts from Europe and North 386. Implementing Agencies and GEF Secretariat fo- America. This has been corrected by a recent addition cal area specialists credit STAP with significant contri- of more than fifty experts, most of whom are from butions on strategic advice regarding operational Eastern Europe, Asia, Africa, and Latin America. programs. STAP's most significant contribution ap- pears to be providing the intellectual underpinnings of 390. STAP's role in the review of projects for the the Operational Programs in the climate focal area, GEFOP consultations was generally found by World both through individual writings of the STAP climate Bank and UNDP regional coordinators to be much less working group and through formal and informal cDn- useful than STAP roster reviews. STAP decided to sultations with the GEF Secretariat and Implementing discontinue those reviews in 1997. " Global Environment Facility, "GEF Experiences ill Incorporationi the -Work of STAP," GEF/C.10/5 (October 3, 1997). 64 Study of GEFs Overall Performance 391. STAP has conducted selected reviews of projects at the request of the council with regard to only three projects (Lake Victoria Project, the Rajasthan Solar Thermal Project, and Phase 1 of the Alternatives to Slash-and-Burn Project). The GEF Secretariat reported that the review of the Lake Victoria project was found by the World Bank to be overly broad and not con- fined to scientific and technical issues, whereas, in the Rajasthan Project, the review was not regarded by the Bank as sufficiently timely. STAP did not undertake any selective reviews on its own. Conclusions 392. The study team found that STAP has played a useful role in helping define the Operational Strategy and Programs and that its roster of experts has been valuable to Implementing Agencies in internal review of projects. But it has been less successful in its selec- tive review of projects and its review of projects for the secretariat-Implementing Agency consultations on work program. Recommendations 393. The GEF Council should provide a new, more sharply focused mandate for the STAP in light of the change in GEF's needs and the experience of STAP during GEF 1. GEF Project Cycle Procedures 65 V. GEF PROJEC1- CYCLE PROCEDURES 394. One of the major challenges facing GEF is to Mexican officials that the length of time between ensure that its procedures for managing the project project concept and final approval by the World Bank cycle are cost-effective.5 The process of getting GEF was fortunate in this regard. Similarly, the task man- projects approved is perceived by recipient countries ager reported that the India Ecodevelopment Project as lengthy, cumbersome, and frequently marked by was a stronger project because more than a year was unexplained delays. In the countries visited by the taken between appraisal and negotiation of the loan to study team and covered by local consultants, govern- work out some differences both within the Bank and ment and Implementing Agency officials were asked between the Bank and the Government of India. The about their experience with the GEF project cycle. Brazilian national energy program indicated that GEF's Government officials almost always viewed it as too procedural complexity, including the linkage of the Bra- lengthy and cumbersome, especially in view of the size zil Energy Efficiency Project to a World Bank loan, had of the grants. In only one of those countries (Argen- helped the project, because it focused the agency on tina) did an official assert that the efficiency of i:he matters that had previously been underemphasized, project approval process had improved over time. such as marketing and evaluation. 395. Table 6 shows the incidence of different causes 397. But the team also found that lengthy delays in the for slowness in the project cycle as viewed by officials project cycle often increase transaction costs without in ten countries. Government and Implementing contributing equivalent value to the project. Chinese Agency officials often cited different reasons for delays officials noted, for example, that such delays caused in approval or disbursement. Their explanations are severe problems in their planning process. In some not mutually exclusive, of course, but point to mul- cases, the length of the project cycle even undermined tiple sources of delay. In five of the ten countries in the prospect of project success. The three- to four-year which answers were received on delays, officials men- delay in approval of the associated World Bank loan tioned delays that were either not identified as to for the Red Sea Coastal and Marine Resource Manage- source or that the Implementing Agency had allegedly ment project, for instance, resulted in the project get- failed to explain. In six countries, GEF procedures or ting started only well after the Egyptian Tourist the lack of an operational strategy were mentioned as Development Authority had allocated more than 40 the cause of delay. Disagreements between govern- percent of the Red Sea coastline to developers for ment and Implementing Agencies were cited as the tourism, severely reducing the potential impact of the cause in three countries, and either inefficiency on the GEF project that was supposed to produce a manage- part of the Implementing Agencies or their procedures ment plan that would guide allocations for tourism were cited in five countries. Not included in the data and for protected areas. In the case of the Poland Coal- were instances of delays attributed to problems wit:hin to-Gas Project, the situation in Poland changed dra- the recipient government, although such instances matically in the three years between entry into the GEF arise frequently. work program and approval by the World Bank. By the time implementation began, many other entities had 396. Of course, a longer process for project apprcval already undertaken coal-to-gas conversion projects in does not always have a net negative impact on the final the country. project. The study team found instances in which ei- ther project sponsors or the ImplementingAgency task 398. The study team examined the factors affecting manager indicated that the delay had ultimately i.m- the GEF project cycle, including GEF's project cycle proved project design, implementation, or both. In the procedures and their impact on transaction costs for Mexico Protected Areas Program, the team was told by recipient countries and Implementing Agencies. These 6 Instrumentfor the Establishment of the Restructured Global Environment Facility, o. cit., paragraph 4, p. 6. 66 Srudy of GEFs Overall Performance TABLE 6. CAUSES OF DELAYS IN PROJECT APPROVAL IN TEN COUNTRY STUDIES Unidentified or No Government- Implementing Information from Implementing Agency Country Agency GEF Procedures Implementing Agency Disagreements Argentina J Brazil .1 .1 China l __ Egypt India I I Indonesia I Philippeons l / Poland .1 l Russia Viet Namn 1/ procedures may increase the transaction costs of pre- 400. The submission of project concepts by recipient paring GEF project proposals either to recipient coun- country governments and other sources to Implement- tries or Implementing Agencies or both. They may ing Agencies is the first major potential procedural raise costs by increasing the length of time required for issue in the project cycle. Most project ideas that have a project concept to reach the implementation stage by been generated at the country level have been rejected increasing the staff time and "nuisance cost" of getting by the Implementing Agency rather than by the secre- a proposal through the approval process successfully tariat in the consultations with the Implementing or by discouraging the submission of proposals to GEF Agencies. Both World Bank and UNDP procedures call that would advance its objectives. Three project cycle for country offices to screen projects for GEF eligibility procedural issues were identified by either recipient before passing them on to headquarters. But at UNDP, countries or Implementing Agencies as increasing there was relatively little such screening at the begin- transaction costs significantly: ning of GEF 1. The review of project ideas at headquar- ters increased both the time required to respond to * Implementing Agencies' project cycles project initiators and the risk that the latter would * Requirement for incremental cost calculations experience frustration over the process. * Procedures for GEF council review of projects. 401. In fiscal 1995 and fiscal 1996, data submitted by A. IMPLEMENTING AGENCIES' PROJECT CYCLES Implementing Agencies and compiled by the GEF Sec- retariat showed that the agencies rejected far more 399. The project cycle for a GEF project has three project ideas than were developed and submitted to distinct components: project development, GEF review the secretariat for review: in 1995 the Implementing and approval, and approval by the Implementing Agencies developed only twenty-nine project ideas (5 Agency. Most of the time in the project cycle-from percent of the total received) for submission as part of project concept to the beginning of the implementation the work program, whereas 180 project ideas (30 per- phase-is accounted for by preparation of the project cent of the total) were declared ineligible or rejected proposal by the government and interactions between for other reasons .66 the project proponents and the Implementing Agency. ` Global Environment Facility Annual Report 1995 (Washington, D.C.: 1996), Annex C, Table 3, p. 4. GEF Project Cycle Procedures 67 402. At the end of fiscal 1995, the Implementing project development phase, the roles of Implementing Agencies had backlogs of project proposals on which Agencies and recipient country governments vary from they had not acted, either because the agency was one project to another, depending on a variety of waiting for government endorsement, was seeking to factors. In countries with more project preparation integrate the idea into another project, was not sure of capacity, the government is more likely to play the its eligibility, or needed more information. Most of the dominant role, whereas in countries with less capacity, projects in this backlog were ultimately either rejected the Implementing Agency plays a more proactive role or cleared by the Implementing Agencies. Some and is more likely to shape the proposal. projects, however, died of neglect without any action having been taken. A UNDP official commented that, 407. The procedures of the World Bank and UNDP during the 1994-96 period, when a high volume of require that the potential recipient country take formal project ideas were being submitted in many formns, responsibility for preparing the project document for processing often took a long time, and some projects GEF, although Bank staff prepare the contract with the were never acted on. country. Both these agencies, however, have frequently taken initial project ideas that were not eligible for GEF 403 One cause of delay was the inability of GEF to funding and tumed them into GEF project concepts. make a decision on the eligibility of a project in .he The Egypt Energy Efficiency Project, for example, was absence of operational strategy and programs. The sttidy originally written in a way that did not meet GEF re- team heard from recipient country officials in several quirements, and UNDP had to develop it into a project country visits that Implementing Agencies were unable that could be submitted to the GEF Secretariat. to tell the recipient government whether the project would be eligible because the operational program in 408. Both UNDP and the World Bank must review the focal area had not yet been completed. That source and approve the proposed project internally and nego- of delay should have been eliminated by the publication tiate and sign the final contract with the recipient of the GEF Operational Programs in April 1997, but for country, although the Bank's procedures in this regard most officials interviewed, their only experiences with are more complex and lengthy. The study team exam- GEF procedures predated this publication. ined the evolution of the project development phase and GEF approval-to-signature phase of the project 404. Despite the decentralization of responsibility for cycles of the Implementing Agencies to identify key GEF project screening to country offices, review and bottlenecks and actions taken during GEF 1 to stream- screening of project ideas by UNDP offices remained line the process. spotty in 1997. In some countries, according to UNDP officials, it is done inadequately or not at all. A UNDP 409. Differences between the Implementing Agency paper on UNDP/GEF project cycle management writ- and the project sponsors in the recipient country are ten in 1997 noted that headquarters was still "assuming one cause of delay during this phase of the project tasks that should be carried out at the country level.''67 cycle. In a number of cases encountered by the study team in its country visits, it took a year or more of 405. Moreover, officials in Argentina, China, and Bra- negotiations between the Implementing Agency and zil specifically complained that it takes too long for the recipient country before agreement could be reached Implementing Agency to inform them of the status of on a project brief or the final project document. In the project ideas or the reason for it being turned down. In Lake Victoria Environment Management Project, for the case of Argentina, proponents of project ideas were example, disagreements between the Government of reported as claiming that in some instances they re- Kenya, on the one hand, and the World Bank and ceived no response at all. UNEP, on the other, regarding stakeholder participa- tion resulted in a lengthy delay in project preparation. 406. Once the decision is made by an Implementing In the case of the India Ecodevelopment Project, differ- Agency to proceed with formulation of a proposal for ences between the World Bank and India caused a submission to GEF for review, the longest pre-imple- year's delay between the Bank's internal appraisal and mentation phase of the project cycle begins. In this negotiation of the project agreement. 17 "Final Proposal: Project Identification, Formulation and Approval Processes, UNDP/GkF Project Cycle Management" (May 28, 1997), p. 3. 68 Study of GEFs Overall Performance 410. The necessity for project proponents within re- 413. The World Bank GEF project cycle until late 1996 cipient govemments to obtain consensus among key took about twenty-seven months on average. Develop- government and nongovemmental stakeholders on the ment of the project concept to work program approval proposed project is also an important factor in the took about eighteen months. But work program ap- length of time required for this phase of the project cycle. proval to Bank approval took another nine months because of a more complex process of intemal approval 411. Another major cause of delay in the past was the than UNDP's.i9 A major bottleneck for the Bank was uncertainty of UNDP staff that the project brief would that it had only presented project documents to GEF for be approved by the GEF Secretariat. That uncertainty review relatively late in the process of preparation- reduced the incentive to write the project document, only after many months of development of the proposal. which required a significantly greater amount of work, As in the case of UNDP, the GEF review process added at the same time as the project brief. So work on the four months to the World Bank's GEF project cycle. The project document did not begin until after GEF ap- Bank's project proposal was already so advanced in proval of the project brief, adding at least several preparation during the GEF review process that Bank months to the UNDP project cycle. The UNDP project staff could only wait for the GEF process to be com- cycle was shortened during 1997 by combining the pleted before proceeding with staff appraisal of the pro- processes of writing the project brief and the project posal and negotiation of the project agreement. document. Thus, a project can be appraised by the country Project Appraisal Committee even before final 414. In late 1996, the Bank implemented the recom- approval by the GEF Council, and the agreement can mendation of a task force report intended to shorten be signed quickly after that approval. the GEF project cycle and began to submit project proposals to GEF at a much earlier phase of develop- 412. This streamlining has been facilitated by several ment, when it was still essentially a project concept developments, according to UNDP regional coordina- rather than a detailed proposal. That meant that the tors. First, since 1996, PDF funds have been used to four months taken up for GEF review of the proposal develop the project and the accompanying process of would not be additional, because development of the approval of the PDF request by the GEF Secretariat; proposal could continue without interruption. So the this has given UNDP staff a much better idea of what period from project identification to GEF Council ap- the secretariat expects in relation to a particular project proval could be reduced from eighteen to fourteen and greater confidence that the brief will be approved. months. (This project cycle reform applied mainly to Second, the beginning of upstream consultations with biodiversity projects, because most of the Bank's GEF the secretariat in 1997 further increased UNDP staff projects in the climate focal area are developed initially confidence that the final project brief would be ap- by non-GEF Bank staff and are designated as GEF proved and, thus, the incentive for early work on the proposals only at a relatively late stage.) project document. Third, as the project brief has in- cluded more detail on budgets and activities, the dif- 415. But the Bank's efforts to reduce the total project ferences between project brief and project document cycle by four months by realigning its intemal project have been reduced. UNDP's submission to the GEF cycle with that of GEF have run up against a GEF Corporate Budget for 1998 indicates that processing procedural obstacle: the secretariat's requirement for a time for the average project from project identification relatively well-defined estimate of the incremental costs to agency approval has been reduced from twenty-one of the project. Because the proposal was still in an early to sixteen months.68 The study team could not verify stage of development, World Bank staff were unable to that figure. but it believes that a substantial streamlin- provide such an estimate and instead substituted a range ing of the project cycle has taken place. of possible incremental costs, to be refined later. 68 GlF, GEF Corporate Budgetfor FY98, op. cit., Annex 2, p. 1. e9 GEE GEF Corporate Business Plan FY98-00, Q. cit., Annex 2, p. 3. This account of the average elapsed time of the World Bank project cycle differs from that presented in a task force report in mid-1996, which showed an average cycle of twenty-three months. See World Bank. Environmentally Sustainable Development, Report of Task Force on Streantlining Bark-GEF Procedures, Annex V, p. 1. GEF Project Cycle Procedures 69 416. The secretariat rejected that alternative, however, "agreed incremental costs" of activities in the four focal on the ground that the GEF Council would not accept areas are eligible for funding. The same principle is such an "open-ended" incremental cost estimate, fear- included in the language of the biodiversity and climate ing that it would encourage the use of higher-end conventions, for which GEF is the financial mechanism. estimates. The World Bank GEF Coordinating Unit believes that the requirement for a specific figure for 421. The main reason that the incremental cost prin- incremental costs forces the unit either to come up ciple has been so prominent in GEF's operations is that with an estimate that is not yet reliable or add months donors want to ensure that the grants for activities for to the GEF project cycle. the global environment are not actually replacing funding that would otherwise be committed by the Conclusions recipient govemment. Indeed, donor contributions to GEF are premised on the continued use of incremental 417. The GEF project cycle is long and complex and costs as the cost-sharing principle. has generated much complaint by recipient countries. However, the study team found that both UNDP and 422. In May 1995 the GEF Council approved a secre- the World Bank have implemented significant reforms tariat paper setting out in detail the approach for esti- of their GEF project cycle-UNDP, by combining lhe mating agreed incremental costs and financing preparation of project briefs and project documents, modalities, while calling for its "flexible application." and the World Bank, by moving its submission of The essence of the incremental cost concept presented project briefs upstream, so that it can still continue in the secretariat paper is simple: the costs of the project preparation through the stage of GEF approval. eligible activities are to be compared with the costs of The largest component of the project cycle involves the activities for national development for which they project preparation by the recipient government and substitute or modify. The difference between the two the Implementing Agencies. sets of costs is the incremental cost of GEF-eligible activities. Incremental costs are viewed as the burden 418. The team found that the benefit of shortening the accepted by the country in choosing activities that World Bank's project cycle by realigning it with that of benefit the global community instead of those that GEF far outweighs the benefit of enforcing a require- simply benefit the country itself. ment for a single cost estimate at the project concept stage. An estimate that it is simply halfway between 423. The main problem associated with incremental two ends of the estimated range does not appear to costs has been the identification and quantification of provide any greater assurance of cost minimization the "baseline"-the projection into the future of na- than the full range itself. tional development activities related to the proposed GEF project. The secretariat paper acknowledges that Recommendations determining what constitutes a "plausible" baseline well into the future involves not only calculations of 419. In order to encourage continued adherence by what is economically attractive but assumptions about the World Bank to its streamlined project cycle, the what is politically feasible in each country; this GEF Secretariat should allow the Implementing Agen- baseline is likely to be subject to different interpreta- cies to submit a range of estimates when a project is tions, depending on the perspective of the actor in first submitted, on the understanding that a firm esti- question. Regional coordinators for the World Bank mate will be submitted for final approval. and UNDP told the team that establishing the baseline inevitably involved a degree of subjectivity and that it B. THE INCREMENTAL CoST REQuIREMENT was possible to come to different conclusions about the incremental costs, depending on the assumptions 420. One of the fundamental principles underlying made about a reasonable expectation of government GEF operational programming has been the require- expenditures for environmental purposes. The prob- ment that GEF fund only the incremental costs of a lem is particularly acute when the country in question project-that is, only the costs of those activities that is experiencing an economic-financial crisis, creating provide a global environmental benefit that do not also strong pressures on budgets. This problem is espe- provide national economic development benefits. A cially relevant to calculating the incremental costs of basic provision of the GEF Instrument is that the GEF biodiversity projects. 70 StadV of GEE's Overall Performnance 424. Some task managers and regional coordinators in However, the new procedures have had no impact on the Implementing Agencies, particularly in the World the way in which Implementing Agencies prepare Bank, also complained that the requirement for doing project proposals. The World Bank GEF Coordinating incremental cost calculations for protected area Unit did not view the document as marking any dra- projects in the biodiversity focal area is meaningless matic change in the requirements for incremental cost and simply constitutes unnecessary "busy work." They analysis. The unit's specialist on incremental costs told argue that the GEF requirement for detailed analysis of the study team that the World Bank will continue to such projects raises the transaction costs of project submit the same six-page incremental cost analysis as preparation without yielding any benefit. before, including a cost matrix, even for protected area projects. The Bank's practice will not change, primarily 425. As a result of such complaints and general confu- because the GEF unit wants to reduce the risk of sion among recipient countries about the incremental having to respond to questions. cost requirement, GEF moved to streamline the opera- tional guidelines on incremental costs as they applied 428. The new streamlined procedures obviously had to biodiversity projects. At a GEF Management Retreat not reached recipient countries by the time the study in July 1996, it was agreed that criteria for team carried out its country visits. However, the team "biodiversity rapid incremental cost assessment" were found that the requirement for incremental costs is to be developed, with streamlined guidelines for cli- problematic for most recipient country officials. The mate change projects to follow.70 Draft streamlined country studies do refer to a few instances-mostly in procedures for incremental cost assessment were sent the climate focal area-in which project managers in to the Implementing Agencies in March 1997, and the recipient countries have been actively involved in in- final version was distributed in July 1997. cremental cost calculation.7' However, the country studies also found that most officials of the relevant 426. The streamlined procedures make a sharper dis- agencies had not been involved in initial incremental tinction than the original procedures between substitu- cost calculations. These officials indicated that they do tional and compiementary activities in terms of not understand the concept of incremental cost and incremental cost requirements. Substitutional activi- regard it as something done by the Implementing ties are those that change baseline development activi- Agency. The agencies confirmed that in the vast major- ties in ways that benefit the global environment, ity of cases, international consultants are hired to un- whereas complementary activities have no direct or dertake the incremental cost calculation. major impact on other economic activities. The new guidelines indicate that proposals involving comple- 429. Many officials of recipient countries lodged mentary activities would require evidence of assur- strong complaints about incremental costs, either in ances that existing levels of financing for protected terms of its lack of clarity or the process by which it is areas will continue and that cost sharing and financial decided. The Mexican Environmental Project Ap- sustainability will be built into the project to justify the proval Committee said that the incremental cost proce- incremental costs. Substitutional activities, however, dures were so frustrating that people "do not want to will require further effort to separate baseline and apply to GEF." GEF project officers in China expressed incremental costs, including establishment of a system strong criticism of the process of calculating incremen- boundary that captures all major effects of the pro- tal costs, charging that calculations were made by in- posed activity and an incremental cost matrix. ternational consultants hired by GEF without consulting the officers, that it caused delays in project 427. The new streamlined procedures thus simplify development, and that it resulted in reductions in the incremental cost requirement considerably for project activities that the officers believed were some- most biodiversity project proposals, which are no what arbitrary. In Brazil, a project sponsor in the cli- longer required to include an incremental cost matrix. mate focal area complained that the incremental cost "Final Minutes of the GEF Management Retreat, July 24-25, 1996," Memorandum from Mohammed T. El-Ashry to Rafael Asenjo, Ahmed Djoghlaf, and Lars Vidaeus (October 18, 1996). The Energy Ministry in Argentina, the Climate Change Project Coordinator in Jordan, the Ministry of Non-Conventional Energy Sources in India, and the Foreign Assisted and Special Projects Office in the Philippines. GEF Project Cycle Procedures 71 analysis was meaningless and should be replaced with Implementing Agency makes any changes necessary in a different formula for cost sharing. Some officials from the proposal and finalizes the document according to Russia and Kenya also indicated that there were no real its own procedures and submits it to the CEO of GEF. negotiations on the figures, but that the Implementing Agency's consultant unilaterally determined the 433. On ascertaining that the project document re- amount. flects any comments that were made by the council, the CEO forwards the project document to council Conclusions members for a second review. That review was origi- nally supposed to take no more than four weeks, but 430. The study team recognized that the incremental Implementing Agency officials indicate that it has now cost concept must be retained, because it is necessary become six weeks in practice, and in some cases even to ensure proper cost sharing and, therefore, contin- longer. After that review is completed, the CEO issues ued donor support. However, the team found that the an endorsement letter, which allows the funds to be incremental cost requirement has raised transaction released to the Implementing Agency for the project. costs, primarily by reducing the active involvement of project proponents in preparation of the proposal and, 434. The study team asked Implementing Agency and secondarily, by adding more time to the project cycle. GEF Secretariat officials for their views on this aspect Although the new streamlined incremental cost proce- of GEF project cycle procedures and found unanimous dures are an improvement, the study team doubted agreement that the second review of project proposals that it will be sufficient to persuade most recipient by the council is not necessary and could be eliminated country officials that they can and should be involved without any sacrifice in project quality. The GEF In- in the process. The team found that, in the absence of a strument requires only that the council review project more comprehensive effort to increase understanding proposals once, but the procedure has evolved of the concept and to engage the officials in the process through a series of council decisions that have signifi- of calculating it, these individuals are likely to remain cantly lengthened the project cycle. As the project passive spectators to the process. cycle is now implemented, review by the council in two separate parts of the cycle can take up to thirteen Recommendations weeks. And because the project proposal generally has to be nearly ready for negotiation of the final project 431. A working group representing the GEF Secretariat agreement, no progress can be made on project devel- and the Implementing Agencies should, in consultation opment while the Implementing Agency waits. with the convention secretariats, develop simpler, more straightforward guidance and communication for re- 435. The purpose of the second council review of cipient country officials on the calculation of incremen- project proposals is to verify that any comments made tal costs and a strategy for increasing their involvement earlier have in fact been reflected in the revised project in the process of estimating those costs. document. Such verification is now done by the GEF Secretariat during the brief period between the receipt C. GEF COUNCIL REVIEW OF PROJECTS of the final project document and forwarding the document to the council for the second review. Al- 432. One feature of the GEF project cycle procedures though in the early phase of GEF 1, a few projects were that clearly adds to the length of time required for rejected by the council at the second review, this has approval is the GEF Council review of projects. Ir. the not happened for the past two years. The secretariat present project cycle procedures, after a proposal has believes that, although the second review may have been discussed in bilateral consultations for inclusion been justified in the early phase of GEF 1 because of in the work program and a recommendation is made to lack of experience with the Implementing Agencies, the CEO, the CEO sends the draft project document to the process has now become so routine that actual council members four weeks before a council meei-ing. review by the council is no longer necessary. Both the Members then have three weeks after the council meet- Implementing Agencies and the secretariat support the ing in which to send the secretariat technical com- delegation of the function of verifying the necessary ments on the project proposal. Following this, the changes to the secretariat. 72 Study oJ GEF's Overall Performance Conclusions Recommendations 436. The study team found that eliminating the sec- 437. The GEF Council should seriously consider del- ond Council review of project proposals would have egating the second review of project proposals to the significant savings in time and other costs to GEF. GEF Secretariat. Programming Issues 73 VI. PROGRAMMING ISSUES A. ROLE OF VARIOUS FACTORS IN within and among programs, and from GEF's Opera- DETERMINING THE GEF PORTFOLIO tional Strategy and Operational Programs. The second are the bottom-up, supply-side factors, which result 438. During the Pilot Phase, GEF lacked a formal from the opportunities that present themselves in the governance structure as well as a strategic programn- proposals for GEF funding, driven by country priori- matic approach in the four focal areas. The basic re- ties and Implementing Agency interests. sponsibility for testing project ideas addressing global environmental issues fell to the designated GEF Imple- 442. The GEF Council has played an important role in menting Agencies. They were to identify, develop, arnd determining strategic direction in GEF programming. implement project ideas in consultation with the GEF It did not passively accept the draft Operational Strat- Secretariat. Meetings of GEF participants provided egy presented to it in 1995 but insisted on changes. broad oversight and political guidance. One of the few For example, the council rejected a proposed program- programmatic guidelines given was that about 40 per- ming strategy in biodiversity that would have relied on cent of GEF funds should be used for climate change scientific criteria regarding species richness and ende- and 40 percent for biodiversity projects. This alloca- mism. The main influence of the GEF Council on tion rule has been maintained during GEF 1. programming, beyond approval of the Operational Strategy and Programs, has been its continuation of the 439. Programming during the Pilot Phase was driven informal division of resources among the four focal largely by the project proposals that the Implementing areas, which has meant that about 80 percent of GEF Agencies and intemational NGOs had already devel- funding has gone to biodiversity and climate. The oped. Almost overnight, GEF provided considerable council has also determined that efforts to phase out funding for the biodiversity focal area, in which there ozone-depleting substances should receive a small were many more project ideas than could be funded by portion of GEF funds, because developing countries non-GEF sources. The identification of suitable climate already have access to resources from the Montreal change projects, however, took more time. The Pilot Protocol Fund. Phase work program is, therefore, slightly skewed to- ward biodiversity, which accounts for fifty-eight 443. The conferences of the parties to the biodiversity projects costing a total of $332 million, compared wTith and climate conventions have contributed to shaping forty-one climate change projects totaling $259 million. the GEF portfolio by providing guidance on program- ming. The Conference of Parties to the FCCC called for 440. The lack of a systematic approach to program- a combination of short-term and long-term measures, ming resources was strongly criticized by the Indepen- and the Conference of Parties to the CBD has asked dent Evaluation of the Pilot Phase and was a high GEF to integrate a wide range of activities into the priority for GEF 1. However, the ad hoc programming Operational Strategy. approach did enable the new mechanism to operate experimentally at a time when negotiations on the 444. The direct influence of the secretariat on pro- climate change and biological diversity conventicns gramming has been felt mainly in the international had barely begun. waters focal area, as discussed in more detail later in this chapter. 441. During GEF 1, tw;o kinds of factors have deter- mined the composition of the work program. The first 445. The Operational Strategy was developed by the are the top-down, demand-side factors resulting from GEF Secretariat in consultations with the Implement- decisions of the GEF Council and the conventions ing Agencies and the convention secretariats. Although affecting programming, from efforts made by the GEF some complaints were expressed that the secretariat Secretariat and Implementing Agencies to set priorities tended to ignore comments that did not fit its view 74 Study of GEFs Overall Performance during these consultations, the Operational Strategy als that fits most closely with the strategic objectives of was ultimately fully endorsed by the heads of all three the Operational Strategy and Operational Programs. Implementing Agencies. And the document was dis- To maximize that strategic fit, it is obviously important cussed extensively and finally adopted by the GEF that the strategy and Operational Programs be thor- Council. oughly understood by project originators in recipient countries. The study team found that this understand- 446. The strategy establishes programmatic and stra- ing varies considerably among countries and among tegic criteria and principles for GEF project selection agencies within countries. and development. It defines ten Operational Programs, which are intended to provide "a conceptual and plan- 449. In countries with the greatest project design ca- ning framework for the design, implementation, and pacity, such as Argentina, Brazil, China, India, and, coordination of a set of projects to achieve a global Russia, the team found that some key agency officials environmental objective in a particular focal area."72 are familiar with one or both documents. In China, for Based on the Operational Strategy, draft Operational example, the four-ecosystem approach of the Opera- Programs were developed by the GEF Secretariat in tional Programs in the biodiversity focal area was criti- cooperation with the Implementing Agencies and cized in the Chinese context. The Brazilian STAP. The first draft is dated October 9, 1996, and the Environment Ministry was also familiar with the Op- final printed version appeared in June 1997. The ten erational Strategy, and in Argentina, the Operational programs defined in the Operational Strategy and de- Strategy was said to be important in developing ideas tailed in the Operational Programs document are: for programs. The Indian Operational Focal Point, however, noted that the Operational Programs are not Biodiver-sity widely disseminated among ministries. OPl: Arid and Semiarid Zone Ecosystems OP2: Coastal, Marine, and Freshwater Ecosystems 450. In some other countries, neither the Operational OP3: Forest Ecosystems Strategy nor Operational Programs are understood by OP4: Mountain Ecosystems the agencies that should be initiating project ideas. In some cases, the absence of translations of the docu- Climate Change ments into local languages is a problem, as indicated in OP5: Removal of Barriers to Energy Efficiency Viet Nam and Egypt. In Egypt, however, officials of the and Energy Conservation Organization for Energy Conservation and Planning OP6: Promoting the Adoption of Renewable En- indicated that the strategy and Operational Programs ergy by Removing Barriers and Reducing Imple- are "very voluminous and sophisticated" and that they mentation Costs had not had time to read them. In Kenya, most officials OP7: Reducing the Long-Term Costs of Low did not have a detailed understanding of the criteria for Greenhouse Gas-Emitting Energy Technologies funding in the Operational Programs, and, in both Kenya and Zimbabwe, there was misapprehension on International Waters how land degradation-an issue of primary concern to OPS: Water Body-Based Operational Program these countries-fits into the Operational Programs. In OP9: Integrated Land and Water Multiple Focal Indonesia, key officials at the Environment Ministry Area Operational Program appeared to be poorly informed on how GEF works. OP1O: Contaminant-Based Operational Program 451. GEF projects generally fit declared national 447. In response to recent guidance from the conven- policy objectives-that is, they pursue objectives that tions, transport energy and carbon sequestration have are stated government policy and for which some legis- now been designated as Operational Programs 11 and lative framework or official government action pro- 12, respectively. gram exists. This is particularly the case for biodiversity conservation (support for national park 448. One of the challenges in programming GEF re- systems), climate change (renewable energy pro- sources is how to promote a supply of project propos- grams), and the phaseout of ozone-depleting sub- Global Environment Facility GEF Operational Strateg (Washington, D.C.: 1995), p. 7. Programming Issues 75 stances (for which the requirement is that a country is 456. This allocation of resources among the focal areas signatory to the Montreal Protocol). has had significant implications for programming pro- cesses and outcomes in the focal areas during GEF 1. 452. Implementing agencies play a key role in shaping Biodiversity and climate change have had more funds the GEF portfolio. They differ markedly in the deg::ee than were absorbed by the number of proposed to which they proactively work with governments to projects that were judged acceptable. Meanwhile, the develop project ideas. World Bank data indicate that international waters focal area, which had received an about one-third of the project ideas emanating from indicative allocation of 12 percent of total resources for governments have been jointly developed by the Bank GEF 1-4 percent less than its indicative allocation and the government agency, and two-thirds are gener- during the Pilot Phase-reached the point in 1997 that ated exclusively by the government. But by the timne it could no longer accept any projects because existing project concepts reach World Bank headquarters, vir- commitments were greater than the amount available. tually every one has become a jointly develoFed By July 1997, international waters had PDF B projects project idea. Thus, the fit with GEF Operational Pro- either already approved or close to approval that grams and Strategy is usually quite close. would put the total funding commitments for the focal area at $240 million, the upper end of the indicative 453. UNDP country offices have tended in the past to allocation for the fiscal 1999-2000 period. send most projects directly to headquarters for pro- cessing. The degree of knowledge of GEF Operational 457. The shortage of funding for international waters Strategy and Programs at the country level is a major in relation to the demand was an advantage in that it factor in determining what proportion of project ideas allowed the GEF Secretariat to be more selective re- emanating from govemment agencies can be subniit- garding project proposals. But it also suggests the need ted for review by the GEF Secretariat. UNDP indicates for an adjustment in the indicative funding figures for that, in the climate area, only about half the projects the focal areas. Ideally, biodiversity and climate change they receive are "GEF-able," because project origin-a- focal areas should be close to the point at which all tors did not understand what GEF could fund. available funding is absorbed by quality projects and international waters should be slightly above that 454. The Implementing Agencies' own organizational point as well. strengths, mandates, and requirements also influence the pipeline of GEF projects. The World Bank has an 458. The study team notes that the projected resource internal need to minimize staff time and other transac- programming ranges proposed by the GEF Secretariat tion costs and has been directed by the GEF Counci L to for fiscal 1999-2001 would again allocate only about contribute to GEF through cofinancing, so it seeks to 10 percent of total GEF resources to international wa- maximize the number of GEF projects that can be fully ters. That would mean that the entire focal area would blended with World Bank loans. That need probably receive only $220 million-$20 million less than was biases the World Bank GEF portfolio in the direct:on allocated in fiscal 1997-2000. The team is concerned of larger projects. that this could create an even greater gap between eligible projects and the funding available in the inter- B. OvEuRL PROGRAMMING ISSUES national waters focal area than emerged during GEF 1. AUOCATION OF RESOURCES AMONG THE FOCAL AREAS Conclusions 455. GEF's programming of resources among the four 459. The study team found that the existing and areas has been guided by the general view of the counicil planned allocation of funds for the international waters that biodiversity and climate are of primary importance, focal area is likely to be inadequate, given the experi- because of their link with the two global conventicns. ence of GEF 1. Thus, the GEF work program as of July 1997 showed that the biodiversity and climate change focal areas lhad BALANCE BETWEEN INVESTMENT AND NONINVESTMENT respectively received 38 percent and 38.7 percent of the ACTIVITIES total resources allocated, whereas 11.3 percent had gone to international waters, 7 percent to ozone, and mult:fo- 460. Another programming issue is whether an ad- cal area projects had received 5 percent. equate balance has been struck in GEF programming 76 Study of GEF's Overall Performance TABLE 7. DISTRIBUTION OF GEF FUNDING BY PROJECT TYPE (US$ MILLIONS) Pilot Phase GEF 1 Stand-Alone "Integrated" Stand-Alone "Integrated" Capacity Investment and Trust Capacity Investment and Focal Area Building Capacity Building Funds Total Building Capacity Building EA's Total Biodiversity 54 214 64 332 6 246 15 267 Climate Change 41 218 249 186 315 22 355 Int'l Waters 3 115 118 59 59 Ozone 4 4 109 109 Multifoccl 3 17 20 90 90 Total 101 568 64 733 24 819 37 880 Total (percent) 14 77 9 100 3 93 4 100 Source: GEF Secretariat, Quarterly Operational Report, June 1997. between investment activities, on the one hand, and 463. Potential recipient countries are by far the largest capacity building, training, and research activities, on source of project ideas (accounting for 47 percent of the other. If GEF is to be effective as a catalyst for the total, compared with 16 percent for NGOs and 25 increased policy and programming emphases on ac- percent for the Implementing Agencies themselves tivities that yield both local and global environmental during fiscal 1997) .74 Data on project ideas by category benefits and are sustainable in the long run, it must are available only for fiscal 1995-96 and do not distin- support recipient countries in both types of activities. guish on the basis of the source of the idea. It can be assumed that they are broadly representative of gov- 461. In the early period of the GEF Pilot Phase, GEF ernment preferences, even if the percentages for gov- work programs were clearly divided into a work pro- ernment-originated ideas would be slightly different. gram for investment projects and a work program for The Implementing Agencies' data on project ideas sub- technical assistance projects.73 The question of balanc- mitted by category for those years show that the over- ing investment and technical assistance projects, thus, whelming majority have been related to capacity stems from this clear distinction in the beginning of GEF. building. Capacity building, technical assistance, and research proposals represented 75 percent of the 462. To consider this issue, the study team first re- projects submitted.75 viewed the number of project ideas submitted to the Implementing Agencies, according to category, as re- 464. Analysis of the GEF portfolio of approved ported in the GEF Annual Reports for fiscal 1995 and projects (Pilot Phase and GEF 1) led the study team to fiscal 1996. These data indicate recipient countries' conclude that GEF has addressed the ongoing needs perceived needs in regard to capacity building and for capacity building and investments by integrating investment activities. Then, it reviewed the GEF port- them in regular projects. With some few exceptions, folio of approved projects to see how the two were regular GEF projects cannot be clearly differentiated balanced in GEF programming. between capacity building and investments projects. 'Global Environment Facility, "Report by the Chairman to the December 1991 Participants' Meeting," Part One: Main Report (November 1Y91), p. 13. 74These figures are preliminaryandbased onpartial datasubmittedbylmplementing Agencies during fiscal 1997. See Global Environment Facility, Draft Annual Report of the GEF, FY97, GEF/C. 10/9, Annex G. GE71, Aniual Report 1995, op. cit., Annex C, Table 2, p. 4; Annual Report 1996, Annex B, Table 5. Programming Issues 77 As shown in table 7, when the amount of funding, is GEF 1 has not funded any trust funds, although some considered, 77 percent of Pilot Phase and 93 percenm of are now in the pipeline. GEF 1 projects were "integrated" projects involv-ng both capacity building and investment components. 468. Programming during GEF 1 has, thus, been guided by an explicit assumption that projects should 465. The investment components of these "integrated" generally include both "investment" and "capacity- projects concentrate on activities such as physical in- building" components and that capacity building frastructure for conservation, credit guarantees, con- should not become a separate category of projects. struction, or equipment purchase options (for This reflects the council's opposition to funding capac- example, to stimulate the expansion of alternative en- ity-building activities that are not linked directly to ergy technologies, to improve the management of pro- regular projects. This general orientation toward inte- tected areas or to purchase vehicles and other grating capacity building with investment activities equipment to assist with management). In addition, was further reinforced in May 1997 when the GEF these projects also make provision for training, policy, Council adopted a set of principles for financing of and research activities. For example, in the targeted research. These require that GEF-funded re- biodiversity focal area, the World Bank's large search projects be designed either to support a specific projects-usually thought of as "investment" group of projects or an individual operational pro- projects-are all focused on developing managem2nt gram. Because of this "supportive" requirement for plans, monitoring and evaluation systems for pro- targeted research, it is anticipated that the funds flow- tected areas, and biodiversity conservation and have ing into such projects will be limited to a small share of budgets for capacity building in the millions of dollars. total GEF programming resources. A large investment project such as the World Barnk's Indonesia Kerinci Seblat incorporates capacity-build- Conclusions ing elements with a budget of almost $6 million of a total of 51 million in GEF funding. 469. The study team concluded that GEF has used the most effective approach to balancing capacity-building 466. The twenty-eight projects that we could catego- and investment activities in the portfolio, which is to rize as stand-alone capacity building in the Pilot Phase combine both types of activities in the same project. accounted for 14 percent of Pilot Phase funding, whereas the seven stand-alone capacity-build-ng C. PROGRAMMING ISSUES IN BIODIVERSITY projects in the GEF 1 portfolio represent less than 5 percent of that funding. Most of these are regional 470. The study team identified two primary issues in climate change projects (including Climate Change the programming of GEF resources in the biodiversity Capacity Building; Global Change Systems for Analy- focal area: can and should GEF do more to set priori- sis, Research, and Training; and Asia Least-Cost ties for specific ecosystems or ecosystem types? And Greenhouse Gas Abatement Strategy) and were imple- should GEF deliberately allocate more resources to mented by UNDP or UNEP. projects on sustainable use of biodiversity and less on projects on protected areas? 467. Biodiversity trust funds, which account for six of fifty-nine biodiversity projects and 9 percent of the 471. On the issue of priorities, the first question to be Pilot Phase funding, represent a separate category, be- assessed is whether GEF has done enough to focus cause they involve managing the GEF contribution to available resources on the ecosystems or countries that yield investment income with which to fund project loom largest in biodiversity loss. The Pilot Phase activities. The study team found that the project objec- Evaluation criticized GEF because it found only a "par- tives of trust funds, like other types of projects, inte- tial correlation" between the portfolio of biodiversity grate both types of interventions. Resources of trust projects and the areas of greatest global importance. funds have been used to fund "soft" investments, such Setting priorities by country or ecosystem may be par- as vehicles and equipment for park management ac- ticularly difficult for GEF, however, both politically tivities, demonstration projects, and other high capi- and practically. tal-cost activities, as well as for staff, training, and recurrent costs. With the exception of the $5 million 472 Numerous scientifically based approaches have contribution to the Terra Capita Biodiversity Funid, been advanced as the base for setting priorities in 78 Study of GEFs Overall Peiformance biodiversity conservation, such as the use of such crite- amphibian biodiversity, only one country eligible for ria as species richness or endemism of an ecosystem, GEF funding (Venezuela) has not received support for concentration of species that are at particularly high a biodiversity project.76 risk of being lost ("hotspots"), and the expanse of relatively undisturbed forest capable of providing 476. Countries receiving GEF grants for biodiversity habitat for both large and small species. These have that are among the top twenty-five in concentration of also been criticized, however, for failing to distinguish biodiversity have received 60 percent of the funding, among different types of ecosystems. whereas countries in the next twenty-five received 16 percent of the funding. Islands and groups of islands 473. GEF's programming strategy in this area was es- with high endemism but fewer species overall received tablished in the Operational Strategy as developing a 4 percent of the funding, and other countries received portfolio of projects "from a broadly representative the remaining 19 percent of the funding. This repre- base of globally important ecosystems," while "recog- sents a substantial increase in concentration of re- nizing the potential importance of particular species sources compared with the Pilot Phase, when 54 and endemism-rich ecosystems." The Operational percent of the funding went to the most important Strategy noted in an endnote that no consensus had twenty-five countries and 28 percent went to countries been reached among biodiversity specialists on what that were not among the top fifty. approach to use for priority setting and acknowledged the need for further efforts to develop a GEF approach. 477. Although GEF's programming resources have But no such broader study of priorities has been done produced a reasonable allocation of resources relative by or for GEF. to megadiversity countries, this does not mean that GEF has focused its programming on the sites of great- 474. The secretariat indicated to the study team that it est global importance within each country. Countries has defined "globally important" biodiversity as sometimes push for protection of sites that are not of biodiversity located in ecosystems that are included on the greatest global importance by objective criteria, one of the lists compiled by intemational organiza- and the Implementing Agency does not always insist tions, bilateral agencies, NGOs, or international con- that the sites chosen be those of greatest importance. servation treaties. Such lists include the World Heritage Sites, the Ramsar list of threatened wetlands, 478. Moreover, the criterion of inclusion on a global and IUCN's Global Representative System of Marine list does not provide a very fine screen for determining Protected Areas. priorities in programming. Just three of the global lists consulted by the GEF Secretariat and Implementing 475. This GEF strategy is not intended to concentrate Agencies in determining the eligibility of a project- resources on countries with the greatest concentration the Ramsar Convention, UNESCO Biosphere Reserves, of biodiversity, whether measured by species richness and World Heritage Sites-include about 1,000 sites and endemism or other criteria. Yet the Implementing worldwide, and not all of the biosphere reserves are Agencies have, in practice, tended to focus more on chosen on the basis of global importance. what are known as "megadiversity countries" in devel- oping their biodiversity portfolios. Indeed, GEF re- 479. In addition, GEF has no strategy for ensuring sources have been relatively well focused on countries that resources for biodiversity conservation are going with the highest concentration of biodiversity during to those ecosystem types that are most important or GEF 1. Whereas during the Pilot Phase only six of the that representatives of each type are funded over a ten countries with the highest allocation of resources given period of time. were among the top twenty-five countries in species richness and endemism, all ten of the countries with 480. The study team recognizes that there have been the highest share of resources allocated to biodiversity significant political constraints on GEF's ability to set in GEF 1 are in this key category. Moreover, of the top priorities in its project spending in biodiversity: the ten countries in density of mammal, bird, reptile, and adoption of any strategy that would focus on ecosys- 76 On the ranking of countries in species richness and endemism, see World Conservation Monitoring Cenlre, Prioriticsfor Consmcving Global Species Richness and Endemism, (London: June 1994). Programming Issues 79 tems with the greatest species richness or endemism or another multilateral development bank for the pur- on the most threatened ecosystems or largest relatively pose of biodiversity protection. By having a clearer set undisturbed forest ecosystems would be opposed by of priorities for global biodiversity conservation, GEF some members of the GEF Council. Indeed, sugges- can shift the incentive for some countries regarding tions by the secretariat as to establishing priorities in borrowing for biodiversity projects. biodiversity funding as part of the Operational Strategy were criticized by the council. It is not surprising, 484. The secretariat and Implementing Agencies therefore, that the secretariat has advanced a set of five could collaborate through the Biodiversity Task Force priority ecosystem types under its Operational Pro- in identifying certain ecosystems and ecosystem types gram on arid and semiarid ecosystems but has pro- as priorities for funding in the coastal, marine, and posed no further prioritization within the other three freshwvater ecosystems Operational Program, the forest Operational Programs in biodiversity. Operational Program, and the mountain ecosystems Operational Program. Such identification would be 481. There are some arguments against GEF moving based on species richness and endemism as well as the toward greater emphasis on megadiversity countries or severity of the threats facing them and the estimated countries under greatest threat. Given the limited chances of actually saving the ecosystem's biodiversity quantity of funds, it may make sense to focus on the through GEF interventions. It might also take into quality of each project rather than on whether the account the existing pattern of funding by donors, project fits a particular priority based on criteria of including both gaps and areas of heavy concentration. species richness, endemism, threat, or other scientific Most of these considerations are explicitly mentioned criteria. Because GEF will not be able to fund enough in the Operational Strategy, although not elaborated in projects to have any hope of achieving a strategic target the Operational Programs for biodiversity. based on one of the other scientific approaches, accord- ing to this argument, it might better focus on projects 485. With regard to the second main issue considered that can provide models for the entire bilateral and by the study team-the allocation of funds for pro- multilateral funding community in terms of type of tected areas or for the sustainable use of biodiversity- intervention rather than a site-specific criterion. This it is clear that GEF must try to support both types of approach is consistent with GEF's overall operationial activities. The GEF Operational Strategy states that principle of a diverse portfolio of projects that "prowrde operational programs in biodiversity will cover "long- lessons beyond their immediate impact" and "catalyze term protection and sustainable use of biodiversity" complementary actions or have a multiplier effect." and lists various types of activities in both categories that would be included in the scope of the programs. 482. But this argument does not require the abandon- Neither the Operational Strategy nor the Operational ment of conscious prioritization in programming. GEF Programs in Biodiversity suggest how much emphasis remains the most important source of funding for should be placed in programming resources for these biodiversity worldwide. Maximizing its influence on two types of activities. global biodiversity conservation requires greater focus on a subset of ecosystem types that are higher priori- 486. Thus far, the GEF biodiversity portfolio has been ties, even within each major ecosystem category, based concentrated heavily on protected area conservation on an agreed set of criteria. A strategy for prioritizing in projects. Of the twenty-seven biodiversity projects biodiversity programming would give the GEF Cotn- funded in the GEF 1 work program, only the Central cil greater assurance that the biodiversity portfolic is African Republic Bangassou Dense Forest project and directing funding to projects that have the greatest Sri Lanka Conservation and Sustainable Use of Medici- impact on the status of earth's biodiversity. nal Plants project are wholly or primarily for sustain- able use. In addition, the Guyana lwokrama Rain 483. An even more important reason for a higher level Forest project funded in the Pilot Phase is a demon- of prioritization in GEF biodiversity programming is to stration project on guidelines for sustainable use of reduce the incentive for recipient countries to claim all tropical forests. However, at least nine GEF 1 projects their biodiversity as being of global importance and to that are primarily for protected areas also have sustain- have recourse to GEF funding for conservation when able use components. Fifteen protected area projects they could and should borrow from the World Bank or do not have a sustainable use component. 80 Study of GEFs Overall Performance 487. The GEF Corporate Business Plan for FY 1999- firms for changing their techniques for exploiting bio- 2001 recognizes this imbalance, while noting that pro- logical resources. tected areas are the cornerstone of biodiversity and that GEF will still need to provide adequate support 491. Furthermore, some GEF biodiversity specialists for "significant but poorly protected areas." The study view the idea of removing barriers to the sustainable team agreed there is a need for more emphasis in the use of biodiversity as not well thought through. They portfolio on sustainahle use in view of the increasing point out that biodiversity is a global issue only be- pressures on biodiversity from economic activities in cause of values other than the use value of biodiversity, productive landscapes. However, the team believes including its option and existence values. Unlike cli- that a number of issues should be considered carefully mate, for which there are genuine joint benefits created before allocating significantly greater GEF resources to by removing barriers to win/win solutions, in sustainable use activities. biodiversity there is a serious threat that supporting new uses of biological resources can result in the loss 488. The first issue is whether the additional resources of these values. For example, opening markets for spe- would come at the expense of adequate funding for cies of tropical fruit can result in elimination of the forest protected areas. The number of existing protected ar- and the biodiversity for which it provides habitat. eas in ecosystems of global importance that are consid- ered "paper parks" or that clearly need strengthening is 492. Successful examples of the sustainable use of so great that GEF could absorb many more funds in biological diversity are rare, but NGOs have demon- financing just protected area activities alone. strated in small-scale projects in Africa and Central America that successful applications are possible. In El 489. Sustainable use projects, which generate signifi- Salvador, for example, wood ducks migrating up and cant national benefits, should be capable of attracting down the coast were being systematically killed for more cofinancing, including government commit- food until NGOs convinced communities that they ments of funds, than protected area projects. However, could get more protein from setting nests for the birds there is still too little experience to be able to say and harvesting some eggs, leaving enough to sustain whether such cofinancing will be forthcoming. Addi- the duck populations. A need exists, however, to col- tional funding for sustainable use projects in GEF 2 lect examples of successful experiences in sustainable should not be greater than the increment in funding use projects and disseminate them widely among for the focal area as a whole over GEF 1. Implementing Agency staff as well as staff of recipient agencies. 490. Furthermore, a number of conceptual issues re- lated to sustainable use projects have not yet been 493. Some biodiversity specialists are concerned satisfactorily resolved.77 It is difficult to differentiate about rapidly increasing funding for sustainable use at many types of sustainable use activities from regular a time when conceptual and practical problems of how development activities. Some observers wonder if fi- to reconcile increased use of biodiversity and conser- nancing a project for a shift from unsustainable to vation of ecosystems have not been worked out. sustainable logging, for example, is a legitimate use of GEF funds. It could only be justified if there are signifi- Conclusions cant barriers to the private sector undertaking such clearly economic projects. The problem is that the 494. The study team found that in the biodiversity project would be economic for the economy as a whole focal area, the issue of priorities has been subject to but not for the private sector, which can make more significant political constraints, and there are practical profit by applying more destructive but cheaper tech- limitations on GEF applying a programming strategy niques. One unresolved issue, therefore, is whether based on a scientific set of criteria. However, the team GEF is or should be prepared to compensate private found that GEF had not been able to focus on ecosys- A work-shop sponsored by STAP in November 1997 discussed the problems associated with sustainable use projects. For a summary of the discussion, see Eduardo Fuentes, "Back to Office Report on the SLAP Sustainable Use WA'orkshop, Malaysia, November 24-26,' UNDP, New York. Programming Issues 81 tems of the greatest global importance to the extent the incremental cost concept, because GEF was ex- that would be desirable. It further found that GEF has pected to pay for the difference in cost between a more not yet resolved some of the conceptual and practical expensive but lower greenhouse gas-emitting energy difficulties associated with projects for sustainable use technology and a lower-cost fossil-fuel alternative. It of biodiversity. A major problem in developing viable was not contemplated that GEF would finance projects sustainable use projects is the dearth of published infar- for energy efficiency, because they would be economic mation on successful experiences in such projects. projects for the recipient country. But after extensive discussions, the GEF Council added the two barrier Recommendations removal programs on the grounds that these "win-win" solutions would not happen without GEF financing. 495. The GEF Council should authorize the GEF Sec- The rationale, as outlined in the Operational Strategy, retariat and Implementing Agencies, in consultation is that there are "cultural, institutional, administrative, with the Secretariat of the CBD, to undertake a forrmal technical, policy-related, and financial learning barn- priority-setting exercise to identify the ecosystems and ers" to market penetration by climate-friendly tech- ecosystem types within each Operational Program in nologies. GEF, therefore, would finance the costs of biodiversity that should be the highest priorities for removing those barriers, making it possible for "win- GEF in terms of a set of agreed criteria, including those win" projects to be implemented. specified in the Operational Strategy. 500. Based on both numbers of projects and total GEF 496. The GEF Secretariat should compile information resources allocated, the barrier removal approach has on successful projects in sustainable use from NGOs received most of the emphasis, thus far. As of July 1, and other bilateral and multilateral agencies world- 1997, twenty-three projects in GEF-1 had been ap- wide, and disseminate them to Implementing Agencies proved in the barrier removal category for a total of and recipient country Focal Points. $179.9 million, compared with only three projects in the buy-down category for a total of $93.3 million. D. PROGRAMMING ISSUES IN CLIMATE CHANGE Thus, the buy-down projects constituted just 12 per- cent of the total number of projects and 34 percent of 497. In the climate change focal area, GEF faces the the total funding during GEF 1. Although the Opera- challenge of programming resources to have the maxi- tional Programs did not exist during the Pilot Phase, mum impact in the long run on emissions of green- the secretariat has retrospectively categorized projects house gases in GEF-eligible countries. This raises two with the result that twenty-one Pilot Phase projects distinct programming issues involving priorities: costing GEF $125.6 million are considered to have Should more or less emphasis be placed on any of the been barrier removal projects, compared with only two Operational Programs in the focal area? How much projects costing $37.7 million that are considered to should GEF focus its resources on countries with the have been buy-down projects. So buy-down projects highest emissions of greenhouse gases? represented 9 percent of the projects and 23 percent of the Pilot Phase funding in the climate focal area. 498. The GEF climate portfolio is based on three Op- erational Programs (OPs)-removal of barriers to en- 501. Each approach in the climate portfolio has dis- ergy conservation and efficiency technologies that are tinct advantages and drawbacks. First, barrier removal already commercial (OP5), removal of barriers to re- projects are a good deal cheaper than buy-down newable energy technologies that are already commer- projects. The average cost per project in OP5 and OP6 cial (OP6), and buying down the cost of renewable during GEF 1 through July 1997 was $7.8 million, energy technologies that are not yet commercially vi- compared with $31 million for the average project in able (OP7). But a key programming issue in the cli- OP7. This sharp difference in cost per project makes it mate focal area is how many funds should be allocated possible to do more barrier removal than buy-down to barrier removal projects and how many to buying projects per amount of money spent. down costs of promising technologies? 502. Moreover, barrier removal projects, which are 499. The original strategy envisioned by the secre- obviously much more in the self-interest of the recipi- tariat was to focus on buying down the cost of promis- ent country, generate higher amounts of cofinancing ing technologies. That strategy was directly related to per project, although the difference is much less dra- 82 Studsi of GEF's Overall Pe7formancc matic than the difference in cost. Barrier removal relative importance of the barriers removed by the projects in the GEF 1 portfolio have brought four project and those that still remain. dollars of cofinancing for every dollar spent by GEF, whereas buy-down projects have generated three dol- 506. The main risk inherent in the barrier removal lars for every GEF dollar. It is argued, therefore, that category will continue to be the possibility that a the cost of buying down technologies is greater than project will fail because some key barriers cannot be GEF can afford to finance and the barrier removal removed. However, even if a buy-down project is suc- approach has to be the mainstay of the portfolio. cessful in achieving sufficiently rapid reduction in costs, the technology in question will also face the 503. But each type of project has its own distinct risk. same risk of not being able to surmount various social, Buy-dovwn projects carry the risk that GEF will be policy, and administration barriers. investing in a technology that is not going to be one of the "winners in the long run. Given the long period of 507. Another source of controversy surrounding bar- gestation for such technologies (possibly decades), it is rier removal projects is the secretariat's insistence that difficult to anticipate which technologies will achieve commercial demonstration not be included in the the steepest learning curve and reduce costs to the scope of barrier removal projects. The rationale for this point of market penetration first. GEF has tried to position is that once barriers have been removed, it is reduce that risk by inviting projects related to seven up to the private sector to finance demonstrations. But different technologies and by its readiness to revise the photovoltaics and wind power technologies may be list in light of experience. Nevertheless, there is a simultaneously cost-effective in off-grid applications substantial risk that the technologies that are now but not cost-effective for on-grid applications in the being backed may turn out to be the wrong ones. This same country. So UNDP has argued that it may be risk is often referred to as the "technology risk." necessary to have a small commercial demonstration component within a larger barrier removal project to 504. Barrier removal projects, however, carry the risk promote the on-grid application of the technology. tha- GEF may not be able to remove all the constraints Thus, for some of the technologies that are becoming to commercial viability and that the energy efficiency mainstays of the GEF climate portfolio, there may no or renewable energy technology will remain stymied such thing as a pure barrier removal project. by barriers that were beyond the project's ability to influence. One of the problems that such projects face 508. The question of allocation of GEF resources by is that governments may temporarily remove a barrier, country is framed starkly by the statistics on emissions such as tariffs or subsidies for the purpose of the of greenhouse gases. The top ten greenhouse gas-emit- project itself but later reimpose the barrier. Moreover, ting countries among those eligible for GEF projects the range of barriers to commercialization of a technol- account for nearly one-third of all emissions of carbon ogy that may be encountered in a single market may be from fossil fuel burning worldwide. So they are clearly rather large, and some may only become known dur- crucial to the success of the global climate change ing the lifetime of the project. UNDP argues that it is regime. And the programming of resources in the cli- not realistic to expect each project to come up with a mate change focal area since the beginning of the Pilot way to remove every barrier, as the Operational Strategy Phase reflects the importance of these ten countries. and Programs now require. UNDP believes that it may They received $308 million or 87 percent of the total be necessary and desirable to fund follow-up projects funding for countries in the climate Operational Pro- that would build on the first project's achievements. grams ($355 million). Twenty-seven other countries in which GEF projects were funded, accounting for only 505. Thus far, none of the completed barrier removal a tiny percentage of the world's carbon emissions from climate projects have come back for follow-on grants. fossil fuel burning, received the remaining 13 percent It may be premature to draw any conclusion from that of the country-based funding. fact, but it is far from clear that GEF will have to fund barrier removal projects repeatedly in the same coun- 509. This allocation represents a relatively high degree try. The study team believes that the complete elimina- of concentration, considering GEF's mandate to cata- tion of all barriers, whether by the project itself or by lyze activities worldwide through its project funding. other means, is not necessarily a precondition for suc- It has been argued that concentrating GEF projects on cess. The degree of project success will depend on the the biggest countries is a mistake, because the sheer Programming Issues 83 size of the economic systems makes it more difficult based Operational Program and the integrated land for GEF projects to have an impact in those countries. and water multiple focal area) require international According to this view, GEF should be looking prirma- collaboration, whereas the third (the contaminant- rily for the most promising laboratory for technology based Operational Program) does not. The programs innovation, rather than the countries that are now focused on international collaboration put primary emitting the most greenhouse gases, in the hope that emphasis, at least in the first phase of development, on the project will be emulated elsewhere, including creation of institutional mechanisms and diagnosis of high-emitting countries. But although it is important the problem and less on investment activities to correct to have projects in a relatively wide range of countr:ies, problems. in view of the different economic and institutional conditions that exist in each, projects must ultimately 514 Because it is not tied to any existing convention, succeed or fail within the high-emitting countries and the international waters portfolio could develop more they should be the main focus of GEF climate funding. slowly than the climate and biodiversity focal areas: as of June 1997, only six projects had been approved in Conclusions GEF l and five in the Pilot Phase. Another feature of this development, however, was that the GEF Secre- 510. The study team found that the present emphasis tariat was more proactive than in any other focal area, in the climate portfolio on barrier removal is appropri- encouraging cooperation among Implementing Agen- ate, given the risks inherent in any innovative project cies and between the agencies and recipient countries intended to promote long-term change toward adop- in developing project proposals for various water bod- tion of climate-friendly technologies. It further fotund ies. The twenty projects in the pipeline as of September that more emphasis may be needed on combined 'ar- 1997-particularly those in OP8-reflect greater com- rier removal and buy-down projects, requiring a re- monality of approach than is found in project propos- thinking of the present delineation of Operational als in the climate and biodiversity focal areas. Programs. The team found that GEF has allocated an Moreover, the international waters portfolio is the only appropriately high proportion of climate funding to one in which more proposals have been submitted to high-emitting countries. the secretariat than could be approved with the funds available. Thus, the secretariat has had to say no to a 511. The study team found that the present allocation number of projects that do not fit into its strategy for of funding in the climate change focal area across developing an international waters portfolio. recipient countries is appropriate, given the need to both affect the countries of greatest importance to 515. Another advantage in this focal area that has climate as well as to experiment with different types of contributed to a more strategic allocation of GEF re- projects in a variety of settings. sources is that it can achieve broad coverage of relevant international waters while at the same time setting E. PROGRAMMING IssuEs IN INTERNATioNAL priorities on the expenditures, given the limited num- WATERS ber of large marine ecosystems worldwide and the fact that one project normally addresses the sources of 512 Programming in the international waters fccal degradation of the entire ecosystem. Of forty-nine area can be distinguished from programming in the large marine ecosystems, twenty-five are located in or other focal areas by three characteristics It emphasizes near highly industrialized countries. Of the remaining international collaboration rather than unilateral na- twenty-four, GEF now has full projects or PDFs in tional action. It is not guided by an international coDn- eleven, with two more in the pipeline. vention. And the amount of funding available has turned out to be less than the amount than can be 516. The centerpiece of the GEF strategy on interna- absorbed by eligible project proposals submitted by tional waters is the concept of "strategic joint fact Implementing Agencies. finding" as a means of arriving at a consensus on what actions are needed to address threats. In strategic joint 513. Based in part on these circumstances, GEF :las fact finding, collaborating states establish technical adopted a distinctive strategy for the focal area that has teams that work to establish a common baseline of strongly shaped the international waters portfoLio. facts and analysis of the problem in the form of a Two of the Operational Programs (the water bodly- transboundary diagnostic analysis (TDA), which is 84 S[Lcly of GEF's Overall Performance then used to set national priorities for actions to ad- based projects-mostly related to ocean pollution dress threats to international waters in the form of a from ships-accounted for nearly 60 percent of the strategic action program (SAP). This approach repre- total funding in the focal area ($68.9 million out of sents an elaboration of those developed in the past by $118.4 million total). Marine pollution from ships UNEP and other international organizations to address accounts for only about 10 percent of contamination of collaboration on problems of shared water bodies. In international waters, whereas at least 80 percent is OP8 and OP9, these TDAs and SAPs are required for a believed to emanate from land-based sources. The in- project to be eligible for GEF funding. The GEF strat- dependent evaluation criticized GEF's priorities in the egy has been to make funding of investment, technical Pilot Phase for too much emphasis on ship-generated assistance, or capacity-building components of a pollution and called for greater emphasis on pollution project contingent on the successful completion of from land-based sources. Intemational waters pro- these initial stages of the project. gramming in GEF 1 has focused primarily on large marine ecosystems and freshwater basins involving 517. The use of strategic joint fact finding and SAPs as international collaboration; integrated land and water the primary components of projects appears to be the projects was a second priority. Of a total of $62.4 most appropriate approach for OP8 and OP9. It has million allocated in the international waters portfolio some major advantages over an approach that funds during GEF 1, $47.3 million (75 percent) has been investment or technical assistance projects that have allocated to large marine ecosystems and freshwater not been preceded by such processes: first, it builds basins and the remainder to integrated land and water the capacity of recipient countries for international projects. collaboration as well as domestic cross-sectoral plan- ning and policymaking. Second, it provides GEF with 520. Within the contaminant-based Operational Pro- the means of ensuring that national actions are well gram, moreover, the secretariat has turned down sev- targeted and that recipient countries have demon- eral ship-related projects on the grounds that they did strated commitment to them before they are funded. not fit GEF's priorities, despite the fact that such Third, because the issues are of high national concern projects are included within the scope of the Opera- to participating countries, there is some basis for hop- tional Program. Thus far, no project relating to global ing that the structures for international collaboration pollutants has been funded, although a project on and national coordination and policymaking estab- mercury contamination is now in the pipeline. The lished by the projects will remain viable after GEF absence of any such projects is unfortunate in view of funding is ended. the fact that persistent organic pollutants have now been recognized as a priority environmental issue by 518. The SAPs that are supported by GEF grants will the world community and a global treaty is to be generate proposals for actions, most of which are negotiated beginning in 1998. The importance of this clearly in the national interest of the countries con- issue suggests that more efforts should be made by the cerned, because they deal with reducing the pollution secretariat and Implementing Agencies to explore op- of lakes and coastal zones and increasing the produc- portunities for assisting eligible countries in reducing tivity of those waters under national jurisdiction. If dependence on persistent organic pollutants. they are correctly formulated, therefore, the SAPs will show that the incremental costs of most of the actions 521. A development that could affect future GEF pro- are relatively small, covering only components re- gramming in the international waters focal area is the quired to remove or reduce the transboundary effects funding of a UNEP project to carry out a three-year of environmental degradation. So it is vital that the Global International Waters Assessment. This will en- TDA is done properly. Because the processes of negoti- gage government experts on each continent in evaluat- ating the SAPs are still at an early stage, even in the most ing the environmental status and priority threats to advanced projects (the Black Sea and Danube), it is too international waters in the region, establishing a com- early to know how they will address this issue. But there mon analysis of data on which countries could propose is an obvious danger that the SAPs will produce requests actions. The project is intended to provide an authori- for GEF funding that are unrealistically high. tative scientific basis for policymaking on international waters, just as the Intergovernmental Panel on Climate 519. The international waters portfolio has changed Change has done for the climate change issue. It dramatically since the Pilot Phase, when contaminant- should help strengthen political commitment by states Programming Issues 85 to collaborative efforts to address problems of marine development interests of the recipient country, and pollution from land-based sources, overfishing, and how the alternative scenario provides global benefits. other threats. It can also be expected to generate a larger It should make a convincing case that the project has a volume of GEF project proposals for investment and positive incremental cost. technical assistance. These regional assessments, if suc- cessful, could also be the basis for proposing revisions of 525. The study team examined the discussions of in- the Operational Programs in international waters. cremental costs in project proposals included in the 1995 and early 1996 work programs. The examination Conclusions revealed seriously deficient incremental cost calcula- tions in at least ten projects.78 In one case (Mauritius 522. The study team concluded that the approach to Marine Protection and Biodiversity Conservation), programming imbedded in the Operational Strategy there was no mention of incremental cost in the docu- and International Waters Operational Programs has ment at all and no indication as to why GEF's contribu- redirected GEF funding toward challenges that shoLuld tion was $3.3 million. In another case (India have high priority and establishes solid bases for inter- Ecodevelopment), the definition of incremental cost national collaboration and national policymaking on was clearly incorrect. In a third, it was difficult to cross-sectoral issues. The team also concluded that fur- distinguish baseline activities from incremental cost ther initiative is needed in the contaminant-based Op- ones. In several projects, there was no explanation for erational Program on encouraging the development of the incremental cost calculation. In two climate project proposals relating to reducing developing coin- projects (China Efficient Industrial Boilers and India tries' dependence on persistent organic pollutants. Solar Thermal-Electric), the baseline calculation was clearly not according to GEF procedures and, in the . THE APPLICATWN OF INCREMENTAL CosTs former case, the secretariat was concerned that an AS A PROGRAMMING TOOL artificially narrow definition of the system boundary could conceal potentially negative incremental costs. 523. The requirement for distinguishing incremental from baseline costs as the basis for funding is one of 526. In February 1996, the secretariat issued the final GEF's tools for programming its funds. It allows the version of the GEF policy toward incremental costs, as Implementing Agencies and the secretariat to dir-ect revised in light of comments made during the May 1995 funds toward activities that contribute global environ- Council meeting. A new reporting format for incremen- mental benefits rather than toward those that are solely tal costs included a requirement that the costs and in the development interests of the recipient country. domestic as well as global environmental benefits of the In the Pilot Phase, there was no requirement for incre- baseline and alternative courses of action be summa- mental cost calculation in project proposals, and deci- rized in a simple matrix. That requirement and the sions on project approval were made on the basis of circulation of a draft in early 1997 of streamlined proce- whether or not the project would generate net eco- dures for incremental cost assessments have brought nomic benefits to the recipient country. about a fundamental change in project proposals, re- flecting increased understanding of the concept and 524. The study team examined whether GEF has bren methodology by the Implementing Agencies. successful in applying the incremental cost concept in a way that is methodologically clear, well-conceived, 527. A review of GEF Secretariat memoranda on the and rigorous. To ensure the objective of cost-effective outcomes of eight bilateral reviews with the World programming, the incremental cost calculations ac- Bank and UNDP during 1997 showed that nine of companying project proposals should present a level twenty-five project briefs had failed to do the incre- of detail that makes clear how the baseline scenario mental cost matrix in the format shown in the incre- was constructed, how it is related to the economnic mental cost policy paper. However, an examination of 7 The Guatemala Integrated Biodiversity in the Sartum-Mantagua Region, Mauritius Marine Protection and Biodiversity Conservation, Regional Capacity-Building Network for Southern African Botanic Diversity, Central African Republic Bangassou Dense Forest, China Nature Reserves Management, India Ecodevelopment, Indonesia Kerinci Seblat Integrated Conservation and Development, Lake Victoria Environmental Management, China Efficient Industrial Boilern, and India Solar Thermal-Electric projects. 86 Stidy of GEFs Overall Performance the incremental cost matrices themselves revealed that 531. UNDP regional coordinators asserted that there the differences in format were minor in every case but were no cases in UNDP GEF projects in which the GEF one (Pakistan Protected Areas Management Project), in contribution to incremental costs had been increased which no matrix was presented at all. In the other as a result of a revision. The coordinator for Latin cases, the matrices showed clearly the assumptions America indicated that UNDP usually reduces substan- about domestic benefits and global benefits in the tially the original incremental cost request accompany- baseline and alternative courses of action and distin- ing project proposals received from recipient guished among individual components of the project, governments. These proposals usually contain lists of so that it is possible to tell in each case whether the activities for which GEF funding is requested, along benefits accrue to the global environment or to na- with the government's own cost estimates. UNDP win- tional development. nows out activities it believes would not be eligible for funding, either because they do not fall within opera- 528. Of course, incremental cost calculations may still tional programs or because they are not truly incre- use a method or assumption that is invalid. Neverthe- mental to baseline activities. Most of the activities less, they are now far more transparent than they were eliminated by UNDP, according to the coordinator, are a year or two earlier, and gross departures from a those that are not truly incremental. The coordinator reasonable process of calculation are correspondingly estimates that the original request is reduced overall by less frequent. 30-50 percent in most cases and that the generaliza- tion applies equally to climate, biodiversity, and inter- 529. A second issue examined by the study team was national waters projects. whether there is a systematic tendency for incremental costs to be inflated in the project preparation process. 532. World Bank regional coordinators indicated that Some in the secretariat believe that both recipient it is difficult to inflate the incremental costs of a climate countries and Implementing Agencies have incentives project artificially, noting that they are reviewed by to inflate incremental costs-the country because it is several individuals in each case and that such an effort primarily interested in grant assistance for national is not likely to remain undetected. They also note that development purposes and the agency because it task managers have no incentive to inflate the incre- wishes to please the client govemment and because mental costs of climate change projects, even if the higher incremental costs mean larger administrative client govemment is disappointed by the result, be- budgets for projects. Anecdotal evidence suggests that cause it does not increase the administrative budget. officials who initiate projects in recipient countries sometimes find it in their interest to request GEF 533. For some climate projects in the Commonwealth funding for activities they know should be part of the of Independent States region, the final incremental baseline, because they are in the interest of the coun- cost was reduced substantially from the original pro- try. At an Intergovernmental Panel on Climate Change posal: the Hungary biomass project was in the pipeline workshop on the costs of mitigation actions, for ex- as a $20 million project for eighteen months but is now ample, several countries reportedly suggested that they being sent to the GEF Council as a $5.8 million had no incentive to calculate the incremental costs of project. The Ukraine coal-bed methane project was GEF climate projects accurately. listed as a $20 million project for three years but has now been reduced to $12 million. The Czech Republic 530. The team found no evidence, however, of Imple- Kyjov Waste Heat project has recalculated the incre- menting Agencies knowingly cooperating with efforts mental costs five times and is now listed as a $5 million to get more funding from GEF than would be objec- project, whereas the original proposal was in the range tively justified. Agency regional coordinators cite many of $3.8-7.6 million. Projects on ozone-depleting sub- instances in which incremental costs have actually stances are similarly difficult to inflate, according to gone down from the original estimate, and attribute World Bank coordinators; the usual result is that final departures from that to the inherent difficulty of esti- incremental costs are within a few percentage points of mating incremental costs in biodiversity rather than to the original estimate. perverse incentives. ProgrammiPg Issues 87 534. World Bank regional coordinators indicated t hat biodiversity projects have not been subject to a single, commonly understood methodology for calculation of incremental costs as have climate and ozone projects. The possibility that these estimates are in some in- stances higher than they would be if done by an irnde- pendent entity cannot be ruled out. A similar possibility exists for international waters projects. 535. However, the study team did not find any consis- tent pattern in which the Implementing Agencies have constructed inflated incremental cost estimates. In some cases, they appear to have applied the incrernen- tal cost concept to either reduce the costs to GEF compared with what would have been requested by recipient countries or have done the calculation in ways that do not lend themselves to inflating the size of the grant. These data cannot be verified by the study team, but it has no data from other sources that would lead it to doubt the overall picture these data present. Conclusions 536. The study team found that the operationalization of the incremental cost requirement by GEF has ad- vanced markedly since 1995, based on the degree of transparency and detail in discussions of incremental costs in project documents. Although some instances of inflation of incremental cost estimates may have occurred, the study team found no evidence of a gen- eral pattern of such inflation. The team concluded that greater confidence can be placed in the final increnten- tal cost estimates for climate and ozone projects than for biodiversity and international waters projects. 88 Studv of GEF's Overall Perfot-mance VII. FOLLOW-UP TO THE PILOT PHASE EVALUAMON 537. In May 1994 an evaluation of the GEF Pilot 543. Recommendation 3 of the Pilot Phase evalua- Phase was issued by an independent panel of experts. tion: Reform GEF's leadership, management, and or- The evaluation, requested by GEF participants (since ganizational relationships. replaced by the GEF Council), was part of an effort to learn from the experience of the Pilot Phase to guide 544. The Pilot Phase evaluators found that 'the future planning for GEF. The GEF Council, GEF Sec- present operation arrangement is a major impediment retariat, and Implementing Agencies have taken steps to the effective professional leadership and manage- to respond to the evaluation's recommendations. A ment of GEF as a unique international entity." Specifi- fundamental restructuring of GEF took place through cally, the evaluators found that the decisionmaking which the GEF Council and GEF Secretariat were es- processes for project development are complex, cum- tablished, the GEF Instrument was adopted, the Op- bersome, and costly; accountability at policy, program, erational Strategy and Operational Programs were and project levels is diffused; and coordination ar- promulgated, a clear governance structure was estab- rangements among the Implementing Agencies are in- lished, and the permanent monitoring and evaluation effective. The evaluators specifically recommended office was created. The following is a point-by-point four measures: review of developments in GEF reform since the 1994 report was issued. Detailed discussions of many of the 545. First, establish a GEF Secretariat that is organiza- reforms are contained elsewhere in this report. tionally, administratively, and functionally independent from the Implementing Agencies and organizations. 538. Recommendation 1 of the Pilot Phase evalua- This recommendation has been carried out. tion: Clearly articulate the GEF mission. 546. Second, make STAP an independent advisory 539. Recommendation 2 of the Pilot Phase evalua- body. This recommendation has likewise been carried tion: Develop program objectives and strategy. out. 540. The Pilot Phase evaluators found that GEF's 547. Third, prepare guidelines for host countries to raison d'etre was unclear, the overarching objectives propose programs to address global environmental and strategy of GEF had not been fully elaborated, and concems. Guidelines have indeed been prepared, al- clear objectives and strategies were lacking. They though some host-country officials still express con- asked, "What is GEF's niche in global environmental cerns that these guidelines are too complex. affairs that sets it apart from other international en- deavors dealing with environmental issues?" 548. Fourth, broaden the range of organizations eli- gible to implement and execute programs and projects 541. Since the Pilot Phase evaluation was issued, the with GEF funds to include-in addition to the World GEF Instrument and operational strategy, approved in Bank, UNDP, and UNEP-the regional development October 1995, have articulated the GEF mission. A banks, other United Nations agencies, governments, number of other written materials pertaining to the and NGOs. Some of these organizations have become GEF project cycle, Operational Programs, and incre- more involved in the execution of GEF projects. In a mental cost calculations have further articulated the few cases, UNDP has delegated implementation au- GEF mission and framed its objectives and strategies. thority to an outside agency. For example, UNDP del- egated authority to the Asian Development Bank to 542. For mo-e discussion and evaluation on these issues, implement the Asia Least-Cost Greenhouse Gas Abate- see chapter VI on the use of the Operational Strategy and ment Strategy Project in GEF's Pilot Phase. In general, Operational Programs. however, the recommendation to expand the number Follow-up to the Pilot-Phase Evaluation 89 of Implementing Agencies that can sponsor and over- and projects. However, the PIRs do not constitute see projects and receive direct GEF funding has not independent evaluations, because they are prepared by been implemented. the Implementing Agencies and do not go into depth on individual projects. 549. For more discussion and evaluation of these isstues, see chapter IV, section C, on the institutional relationships 556. The Pilot Phase evaluation recommended the between the GEF Secretariat and Implementing Agencies, creation of monitoring and evaluation systems for indi- on STAP, and on expanding the number of Implementing vidual GEF projects. In May 1995, the GEF Council Agencies, and chapter V on GEF project cycle procedures specified that the work program will include "opera- and guidelines. tional monitoring and evaluation, scientific and tech- nical monitoring and evaluation, and evaluation of 550. Recommendation 4 of the Pilot Phase evaluaa- strategic and cross-program issues." To provide an tion: Clarify and establish clear lines of authority independent check on GEF operations, an indepen- for GEF. dent monitoring and evaluation office was established at the GEF Secretariat in April 1996. To ensure inde- 551. The Pilot Phase evaluators specifically recom- pendence from the secretariat and the Implementing mended that the new GEF Secretariat be empowered Agencies, the Senior Monitoring and Evaluation Coor- with programming and budgeting oversight functions, dinator reports directly to the GEF Council in evalua- authority to allocate GEF resources for the programs tion matters. He reports to the CEO in monitoring and and budgets endorsed by the GEF Council. and :he administrative matters. The current evaluation of responsibility of reporting to the council regularly on GEF's overall performance and a separate evaluation of the administration of GEF programs and budgets. The "lessons learned" are coordinated by him. GEF Instrument, approved by the council in October 1995, clarifies these lines of authority. Through fhe 557. In April 1997, the Council approved a monitor- instrument's adoption, this recommendation has been ing and evaluation framework and plan for the GEF .7 largely carried out. But to date, the monitoring and evaluation budget has not been sufficient to facilitate the systematic incorpo- 552. See chapter IV, section C, for more on GEF institu- ration of monitoring and evaluation components into tional roles and relationships. all GEF projects. Instead, individual project perfor- mance is determined largely by the Implementing 553. Recommendation 5 of the Pilot Phase evalua- Agencies themselves. World Bank policy requires that tion: Establish a permanent mechanism for identifyLng key performance indicators for all its projects be estab- lessons and promoting their application in GEF pro- lished during project appraisal. However, the February grams. 1995 paper "Monitoring and Evaluation: Making Headway" by the Bank's Operations Evaluation De- 554. The Pilot Phase evaluators found that no GEF- partment found that there has been inadequate atten- wide system had been set up to gather and disseminate tion to monitoring and evaluation of Bank projects at information systematically on project identification, either the appraisal stage or during implementation. design experience, and Implementing Agency opera- On the other hand, the 1996 PIR states, "The Bank tions or to track and monitor GEF strategies, opera- reports that over 50 percent of its existing GEF tions, and projects. The evaluators also stated that such biodiversity projects have performance indicators that a system should be independent of the Implementing are being tracked regularly." This suggests that the Agencies. World Bank is doing a better job of tracking the perfor- mance of its GEF projects than its non-GEF projects. 555. The main mechanism for gathering and dissemi- nating information on GEF programs and individual 558. The study team was not able to verify the degree projects is the annual project implementation review to which the performance tracking of the Bank's GEF (PIR). The PIR is intended to provide feedback on the projects is in fact taking place. Neither was the team successes and problems of GEF strategies, operations, able to determine whether such indicators are in place 7 Framework and Work Program for GEF's Monitoring, Evaluation, and Dissemination Activities, GEF/C8/Rev 1, April 1, 1997 90 Study of GEFs Overall Performance and are being tracked for the rest of the Bank's GEF 563. The GEF monitoring and evaluation program is portfolio (besides the biodiversity component) or still in an early phase of implementation, so its effec- whether such tracking systems are operating at UNDP tiveness cannot yet be evaluated. Yet, implementation and UNEP for their GEF projects. The 1996 PIR does is proceeding. All three Implementing Agencies are concede the need for "improved monitoring and evalu- cooperating with the monitoring and evaluation team ation systems in projects. and have components of a comprehensive program in place. Timetables are in place for the systematic incor- 559. The monitoring and evaluation coordination team poration of project performance indicators, although estimates that performance indicators will be in place timetables have not yet been set for many other com- for all World Bank GEF projects by July 1998. UNDP ponents of the monitoring and evaluation plan, such as and IJNEP, while working toward the same goal, have the preparation and implementation of performance not yet set dates for completion of this objective. indicators for GEF programs, socio-economic impact, institutional impact, and environmental impact. 560. Thus, at this time the determination of a project's success is largely subjective because there is not neces- 564. Recommendation 6 of the Pilot Phase evalua- sarily a set of predetermined indicators of success tion: Following the development of GEF strategies, against which a project's performance can be evalu- establish common guidelines for the management of ated. Where such indicators do exist, the extent to GEF operations by implementing organizations and which they are used in project evaluations is unclear. undertake an independent review of their capacities. 561. In addition to performance indicators, the moni- 565. The Pilot Phase evaluators were concerned about toring and evaluation plan calls for adoption of risk the institutional capacity and operational procedures rating and baseline determinations in all project sub- of the Implementing Agencies and also the extent to missions; and independent mid-term project evalua- which they would incorporate GEF objectives into tions where project duration will exceed three years. their non-GEF operations. They believed such capacity Risk rating is being done in all World Bank submis- concerns could be addressed in part through the sions and is increasingly being done by the other streamlining of project development procedures; pro- Implementing Agencies. Baseline information address- mulgation of focal area strategies as well as guidelines ing what a host government would do in the absence of on such subjects as participation, incremental cost a GEF project is routinely included in incremental cost calculations. definition of global benefits, analyses. But full baseline determinations that address sustainability, and innovation; and training of Imple- the state of affairs with regard to a country's loss of menting Agency and developing country staffs on forest cover, improving energy efficiency, etc. are not these concepts and practices. being systematically performed by any of the Imple- menting Agencies. The monitoring and evaluation 566. The Operational Strategy and Operational Pro- team plans to address this issue soon. Independent grams have been developed to provide guidance on mid-term evaluations are not being done systemati- how GEF should address each focal area. In addition, cally, although the UNDP and UNEP have undertaken efforts have been undertaken to streamline project such reviews of some of their larger and lengthier development procedures. The streamlining and sim- projects. Instead, the World Bank-and to a lesser plification process is ongoing. Guidelines on incre- extent, the UNDP and UNEP-tend to conduct project mental cost calculations and stakeholder participation monitoring and interim evaluations internally, for ex- have been developed but not on sustainability or inno- ample through the use of staff supervisory reports. vation. 562. The GEF monitoring and evaluation plan calls for 567. There has been no independent review of Imple- a number of non-project-specific evaluations and the menting Agency capacities; it was not within the terms establishment of performance indicators pertaining to of reference of the study team to undertake such a GEF's programs (e.g. the ten operational programs), review. GEF's socio-economic impacts in host countries, GEF's impacts on host-country institutions and policies, and 568. For discussion and evaluation of the effectiveness of GEF projects's environmental impacts. Some initial guidelines for the management of GEF operations, see work has been done to develop these. chapter IV, section C, on GEF roles and responsibilities; Follow-up to the Pilot-Phase Evaluation 91 chapter III, section D, on stakeholder participation; chapter III, section B on country-driven projects and section D on V on GEF project cycle procedures; and chapter V, section stakeholder participation. A, on project implementation issues. 576. Recommendation 8 of the Pilot Phase evalua- 569. Recommendation 7 of the Pilot Phase evalua- tion: Establish mutually beneficial collaboration with tion: Improve participation in the GEF program at the nongovernmental organizations. country and community levels. 577. As stated under recommendation 7 above, public 570. The Pilot Phase evaluators were concerned about participation has generally improved in GEF project inadequate participation by governments and commu- development, and the GEF process is one of the most nities in identifying and shaping Pilot Phase GEF inclusive project development processes in some projects. They believed such participation was neces- countries. Yet many local NGOs continue to express sary for GEF to have broader impact within a couni:ry, concerns about their limited access to information and such as developing and strengthening national ernvi- involvement in GEF project development other than in ronmental action plans and generally increasing con- the Small Grants Programme. They state that they are cern for the global environment. often consulted in a token manner or only after a project has been under development for some time. In 571. The study team found that in rapidly industrial- some cases, ministries concede that they intentionally izing countries, the govemment is the primary initiator exclude NGOs from participation in project design. of project ideas and participates actively in project This is based in part on the ministries' opinion that development; in some other countries, the Implement- most NGOs are ill equipped to participate in the tech- ing Agencies play the dominant role in project devel- nical and financial analyses involved in project formu- opment. Most recipient government officials do not lation and are more suitably used for project participate in the process of calculating incremental implementation and information dissemination. It is costs, which is usually done by foreign consultants. also based on the ministries' belief that most NGOs will not be constructive and will instead, through the 572. Recipient governments are gradually increasing continuous raising of objections, obstruct worthwhile their ability to develop project concepts that are eli- projects. gible for GEF funding, as indicated by an increasing proportion of project ideas received by Implementing 578. The picture is quite different for certain interna- Agencies that meet eligibility requirements. tional NGOs. The Implementing Agencies commonly consult with and involve international organizations in 573. In some of the countries visited by the study preparation of GEF projects. In such cases, the NGOs team, broadly based participation was limited by the are tantamount to consulting firms; as such, they must government. Key government ministries are often ei- abide by the Implementing Agencies' rules on confi- ther marginalized or completely circumvented in iden- dentiality and participation, including the sharing of tifying and preparing GEF projects. The Focal Point information with other NGOs. ministry itself sometimes excludes some ministries from GEF decisionmaking. 579. For more on NGO involvement in GEF project devel- opment, see chapter III, section D, on staheholder partici- 574. The GEF Secretariat has promulgated guidelines pation. for stakeholder participation in GEF projects that go beyond existing Implementing Agency policies on 580. Recommendation 9 of the Pilot Phase evalua- public involvement in GEF-related activities. Strategies tion: Ensure that strategies and program guidelines are for stakeholder involvement are a required part of in place before program initiatives are undertaken with every project proposal. However, not all projects have the funds anticipated from the replenishment for GEF implemented the guidelines in practice. The GEF Sec- II. retariat is in the process of developing indicators of stakeholder participation in GEF projects. 581. This recommendation has to do with the timing of new initiatives relative to the preparation of relevant 575. For more information on government and public guidelines and strategies. The Pilot Phase evaluators participation in GEF project development, see in chapter were concerned that funds would start to be allocated 92 StutdV of GEF's Overall Performiance for certain focal areas or new projects prior to the ments in better-defined categories, and improve over- adoption of the guidelines and strategies called for all management of GEF operations. These were all under recoinmendation 2. serious efforLs to improve clarity, coordination, mani- agement, and ultimately the effectiveness of GEF. In 582. This recommendation was not followed by GEF. general, these actions have been effective and benefi- The basic strategies of GEF are contained in the Opera- cial. Indeed, GEF does have a clearer identity and tional Strategy, which was presented to the GEF Coun- strategy. It is better organized and better managed, and cil in October 1995. Earlier in 1995, however, while NGOs are more involved. the strategy was still being drafted, the council decided to program $280-$340 million or roughly 15 percent 584. But in some cases, GEF has either not imple- of its total resources.80 mented the recommendation or has implemented it partially. It did not refrain from funding projects dur- OVERALL ASSESSMENT OF THE FOLLOW-UP TO THE PILOT ing the period before the Operational Strategy and PHASE EVALUATION Programs were adopted, nor did it choose to imple- ment the recommendation to broaden the range of 583. The GEF Secretariat and GEF Council have taken Implementing Agencies beyond the existing three. And action on most, but not all, recommendations in the although project cycle procedures have been stream- Pilot Phase evaluation. They have prepared documents lined, as called for in the independent evaluation, it is on the GEF Instrument, Operational Strategy, Opera- arguable that the reforms to date have not adequately tional Programs, project cycle, incremental cost calcu- addressed the problem. The recommendation for a lations, and many other topics. These have served to permanent mechanism for identifying and applying articulate GEF mission and strategy, focus GEF invest- lessons has only been partially implemented, thus far. it' Global Environment Facility, Anntual Report 1995, p. 2 Conclusions 93 VIII. CONCLUSIONS 585. GEF has had to evolve quickly as a funding new and additional, but it did find that some countries mechanism for global environmental measures in de- have not distinguished between funding for GEF and veloping countries in general and for the FramewDrk general development cooperation, which does not en- Convention on Climate Change and the Convention courage additionality. on Biological Diversity in particular. Endowed with limited resources and an untested organizational struc- 588. GEF has been able to mobilize a small but grow- ture and facing high expectations and considerable ing level of private-sector financing for projects, but political constraints, GEF has had fewer than four relatively little from private financial institutions. Ma- years of regular operations to create the institutional, jor barriers to increasing support from the financial policy, and procedural bases for a system of selecting sector exist, particularly GEF's long and complex ap- and implementing effective projects to reduce glcbal proval procedures and the comparatively greater risk environmental threats. of GEF projects compared with regular commercial projects. Thus, the study team concluded that more 586. The ultimate test of GEF's performance will be a could be done by the GEF family to increase the attrac- combination of the cumulative impact of GEF projects tiveness of GEF activities to the private sector. on the physical state of the environment and its ability to influence policies and catalyze activities for global B. COUNTRY-LEVEL ISSUES environmental benefit by others. The study team as- sessed the performance of GEF only in mobilizing 589. The study team examined some dimensions of resources for protection of the global environment, in GEF's performance at the country level, including the making its presence felt in recipient countries, in creat- strength of the Focal Point system, GEF's impact on ing an effective set of organizational arrangements and country policies and programs and awareness of the project cycle procedures, and in programming GEF global environment, and stakeholder participation in resources. In conducting the Overall Performance GEF projects. It found that, although it has made Study, the study team was conscious of the brevitv of modest contributions to raising awareness of global the operational phase of GEF, the relatively small size environment issues, GEF has not been able to achieve of GEF funding, and of the relativity of the indicators it visibility in recipient countries beyond a small circle of chose to assess GEF's success. government officials and NGOs. A. RESOURCE MOBILIZATION 590. Moreover, in some countries the Focal Point sys- tem in recipient countries has not yet been adequately 587. Considering the magnitude of investment needs institutionalized, in the sense of having formal coordi- in the focal areas and the small amounts available to nating mechanisms for interacting with relevant gov- GEF, it has to leverage resources as effectively as pos- ernment offices and other country stakeholders. The sible for global environmental benefits. As intendec. by study team recognized that the weaknesses of the Focal the donor countries, the availability of GEF grants has Point system reflect the political realities in individual succeeded in leveraging significant additional funding countries but found that the lack of a comprehensive for projects from a number of sources, particularly GEF strategy for strengthening Focal Points and com- through World Bank loans associated with GEF municating with key constituencies in recipient coun- projects, although the study team found that the extent tries has also limited progress in this area. of genuine leveraging of funds has been overstatecd in GEF documents. It also believes that there is a danger 591. Based on its analysis of projects in the sixteen of placing too much emphasis on leveraging in relation countries on which it had country reports, the study to other measures of GEF's success. The team could team found that in some cases, GEF projects have had not establish whether or not the funding for the GEF is significant impacts on country policies and programs 94 Stttdy of GEF's Overall Performance that go beyond the immediate objectives of the and complexity of directives from the latter. Although projects. Given the relatively small size of the GEF its initial system for processing proposals for enabling projects. the team found that these changes represent a activities was far too time-consuming, GEF has also positive achievement. responded effectively to the request of the Conven- tions to streamline its procedures for approval of en- 592. A key project issue is how successful GEF has abling activities, resulting in a major acceleration of the been in providing for the financial sustainability of process. The problem of how best to assist countries in GEF-funded activities. The study team found that most preparing national reports to the conventions, how- project proposals in GEF 1 did not contain serious ever, remains unresolved. financial planning for continuation after GEF funding. It also noted, however, that GEF has not been realistic 596. The team found that increasing the number of about the time needed in some cases to demonstrate organizations authorized to propose projects directly the project's value and viability to potential future to the GEF Secretariat could result in an increase in the funders. number and types of viable GEF projects, and that increased competition among Implementing Agencies 593. A significant achievement of GEF is its leveraging could help to reduce the transaction costs of such a of greater stakeholder participation in project design, move. Although such a move could also have some development, and implementation than would have disadvantages, the team believes it would have to be been the case otherwise. The study team found that the weighed against the advantages. issuance of GEF guidelines calling for stakeholder par- ticipation resulted in project designs that include de- 597. The calculation of incremental costs of projects tailed and comprehensive plans for public has been one of the most difficult aspects of the transi- participation issues, especially in the biodiversity focal tion of GEF from the Pilot Phase to the operational area. phase. Implementing Agencies had not mastered the concept in the early phase of GEF 1, based on their C. INSTITUTIONAL AND PROJECT CYCLE ISSUES project proposals However, by the end of GEF 1 they had at least begun to make systematic presentation of 594. The study team found that GEF's institutional cost estimates. The methodology has become increas- structure has evolved from a rudimentary set of ar- ingly standardized in climate change, but legitimate rangements to a relatively effective set of mechanisms differences still arise over baseline assumptions. With for coordination and decisionmaking in a short period. regard to biodiversity, the team had much less confi- The team found that despite differences in culture, dence in the rigor of the calculations. The team found mandate, and structure among Implementing Agencies that the most serious problem with incremental cost and between them and the Secretariat, the GEF has calculations is that recipient country officials are gen- taken a series of organizational and procedural steps erally excluded from the process, because they do not that have resulted in the first systematic coordination understand the incremental cost concept or the possi- of pipeline development among the Implementing bility of negotiating with the Implementing Agencies Agencies, the streamlining of the project review pro- on the basis of a range of incremental cost estimates cess, and the beginning of joint consideration of the reflecting different assumptions. key strategic issues in programming. The Implement- ing Agencies have also made some progress in shorten- 598. The main shortcoming identified by the team is ing their own project cycles. Although the project cycle that the Implementing Agencies have done much less is still lengthy, the team noted that some of the key to mainstream the global environment in their regular factors contributing to the length of the project cycle operations than the team believed was possible. Al- are under the control of recipient government rather though the World Bank has made a significant contri- than GEF. bution to GEF through its cofinancing of GEF projects, neither the Bank nor UNDP has done as much as it 595. GEF has implemented the guidance of the could to integrate global environmental concerns into Framework Convention on Climate Change and the its regular project programming. Although UNDP was Convention on Biological Diversity in an appropriate restricted in this regard by its five-year project plan- and timely manner, especially considering the number ning cycle during GEF 1, it could have done more to Conclusions 95 integrate the global environment into programming in should be financed by the country itself. The team is its Country Cooperation Frameworks over the past conscious of the difficulty of clearly delineating activi- two years. The Bank has taken no meaningful steps to ties for global benefit that should be financed by the reduce the global environmental impact of its tradi- GEF from those that are for national benefit and tional role as financier of fossil fuel power develop- should therefore be financed by governments them- ment. Nor has it put into place the necessary sLaff selves. incentives for encouraging work on GEF projects. UNEP has been slow to internalize the principle that E. OVERALL CONCLUSION GEF projects should be additional to the core activilties of an Implementing Agency and has not provided any 601. The study team concluded that the GEF has incentives for staff work on the GEF. generally performed effectively with regard to rapidly creating new institutional arrangements and ap- D. PROGRAMMING ISSUES proaches to programming its resources in the four focal areas. The GEF has also been relatively successful 599. GEF has made considerable progress in pro- in leveraging cofinancing for GEF projects, and has gramming resources strategically for greatest global had some positive impacts on policies and programs in benefit within the four focal areas. Considering that no recipient countries. A significant accomplishment has agreed basis for programming resources existed when been the development of the Operational Strategy and GEF became operational in 1994, the team views the Operational Programs, and the advancement of stake- development of the Operational Strategy and Opera- holder participation in GEF projects. On the other tional Programs, in cooperation with the convention hand, the Implementing Agencies have made little secretariats and based on convention guidance, as one progress in mainstreaming the global environment, of the most significant achievements of GEF. The team and the team believes that much more needs to be also found that the GEF has successfully balanced done in several areas, including strengthening the Fo- capacity building and investment activities in the port- cal Point system, improving the process of calculation folio by generally combining both types of activities in of incremental costs, better planning for the financial the same project. sustainability of projects, shortening the length of the project cycle, and raising awareness of the GEF and of 600. The study team concluded that GEF has per- global environmental issues. formed well in its choices of project interventions tc be supported in the biodiversity, climate, and interna- 602. The study team believes that the progress made tional waters focal areas. Although the team recognizes in the brief period of GEF 1 and the potential for much that there are political factors that may restrict the greater success, particularly in mainstreaming. consti- GEF's freedom with regard to prioritization in the tutes a basis for building a much stronger GEF in the biodiversity focal area, it found that greater priority near future. The success of the GEF ultimately hinges, setting is necessary, in part to establish a clearer dis- of course, on political support in donor and recipient tinction between biodiversity conservation that should countries for mainstreaming global environmental be financed by the global community and that which concerns into development. 96 Study of GEF's Overall Performcance ANNEX 1. TERMS OF REFERENCES FOR A STUDY OF GEF's OVERALL PERFORMANCE (INCLUDING SCOPE OF WORK FOR THE EXPERT ADVISORY PANEL) L BACKGROUND ference on Environment and Development, and relevant international treaties such as the Montreal Protocol. The Global Environment Facility (GEF) is a fi- nancial mechanism that promotes international coop- The "Instrument for the Establishment of the eration and fosters actions to protect the global Restructured GEF", the GEF Operational Strategy and environment. The grants and concessional funds dis- other key documents and Council decisions have laid bursed complement traditional development assis- down additional objectives and guidelines for the GEF tance by covering the additional costs (also known as itself as well as for GEF-supported projects. These are: agreed incremental costs") incurred when a national, . to establish GEF as the principal mechanism for regional, or global development project also targets global environment funding; global environmental objectives. The GEF has defined four focal areas for its programs: biological diversity, * to ensure a govermance structure that is transpar- climate change, international waters and ozone layer ent and democratic in nature; depletion. Efforts to stem land degradation as they . to promote universality in its participation and to relate to the above four focal areas are also eligible for provide for full cooperation in its implementa- GEF funding. tion among UNDP, UNEP and the World Bank; After a Pilot Phase of three years, the Restruc- * to secure that projects are country-driven; tured Global Environment Facility (GEF) was made . to support capacity building and enabling activi- operational in 1994 with a pledged core fund of USS 2 ties (These activities are designed to help coun- billion. Project approvals have increased steadily over tries fulfill their commitments under the two Rio the years, and now total about US$ 1.6 billion. Conventions on climate change and on biodiversity and relate to national reporting and The GEF Council, comprising 32 members from development of national strategies in these two developing and developed countries, as well as coun- focal areas); tries in transition, is the governing body. GEF's Imple- menting Agencies (IAs) are UNDP, UNEP, as well as * to create participatory schemes in the local con- the World Bank, which also serves as GEF's trustee. text at all stages of project design and implemen- The Scientific and Technical Advisory Panel (STAP) is tation, particularly by involving local stakeholder an independent advisory body that provides strategic communities and NGO expertise; scientific and technical advice. * to gain experience with a broad range of projects in order to identify highly effective approaches The GEF serves as the interim financial mecha- that can be replicated in different settings and nism for the Convention on Biological Diversity and regions or serve as demonstration models in the the UN Framework Convention on Climate Change. In public and private sectors; this function the GEF receives formal guidance from the Conference of the Parties to the Conventions and is t accountable to them. In its work related to interna- cedures; tional waters and the phase out of ozone depleting . to use the most cost-effective instruments avail- substances the GEF takes into consideration guiding able; and principles from Agenda 21 of the United Nations Con- Annex 1. Terms of Reference 97 to encourage co-financing arrangements and Fol- ments, the study will assess the extent to which effec- low-up activities supported by recipient and dLo- tive cooperation mechanisms and procedures have nor governments, multilateral aid organizaticns, been established among the GEF Secretariat, lAs, NGOs, and the private sector. STAP, convention secretariats, and other cooperation partners. The study will also examine the extent to The study of GEF's Overall Performance will not which the GEF has encouraged integration of global address the first two bullet points, but will otherwise environmental objectives into mainstream operations assess to what extent the GEF has achieved, or is on its of multilateral and other aid organizations. way to achieving, the main objectives and guidelines laid down during the Pilot Phase in 1991 and during GEF's PROGRAMMING EFFORTS the restructuring in 1994. The 1994 Independent Evaluation of the GEF will serve as useful background The study will assess GEF's approaches and strat- material in this respect. egies to operationalize Convention guidance and Council decisions. With a primary focus on the Opera- The study report will be an input for the GEF tional Strategy and Operational Programmes, it will Assembly to be held in early 1998, but is equally address criteria and priorities for developing the over- intended to inform all GEF stakeholders, particularly all portfolio, project selection, the choice of viable the convention secretariats, the GEF Council, govern- concepts, technologies and designs as well as systems ments Implementing Agencies, executing agencies, for learning from experience, as well as demonstration NGOs and the interested public. and replication of promising approaches. H. SCOPE OF WORK PROJECT IMPLEMENTATION LESSONS PROVISION OF RESOURCES The GEF's project portfolio is still at an early stage of implementation, and therefore does not allow The study will firstly assess the GEF's role as a for conclusive aggregated analyses of outcomes and catalyst in providing and leveraging resources for glo- impacts. However, the nearly 100 projects that have bal environmental efforts by developed and develop- been under implementation for more than one year ing country governments, multilateral and other have just been subjected to the second Project Imple- institutions and the private sector. It will also study mentation Review. Likewise, an ongoing "Evaluation of whether GEF's "incremental cost financing" has had Project Lessons" will provide useful portfolio insights. the effect of mobilizing new and additional resources for global environment efforts. The study will distill and present the main les- sons learned from GEF's project monitoring and evalu- ISSUES AT THE COUNTRY LEVEL ation activities. GEF has been assigned the role to assist develop- 1I. SUBJECT AREAS FOR ASSESSMENT ing countries' efforts to fulfill their responsibilities un- der the Convention on Biological Diversity and the UN 1. INCREASING RESOURCES FOR GLOBAL ENVIRONMENTAL Framework Convention on Climate Change. The study EFFORTS will examine this role as well as the modalities of cooperation between the GEF Secretariat, implement- The study team shall: ing and executing agencies vis-a-vis host governmenits, 1.1 assess the effectiveness of the GEF in providing national institutions and stakeholder groups in additional funds for developing countries' global projects, and the extent to which GEF has helped environmental efforts; promote global environmental objectives in recipient countries beyond the narrow project settings. 1.2 assess the extent to which the GEF in the pilot and present phases has been able to leverage INSTITUTIONAL ISSUES AND PROCEDURES other resources for developing countries global environmental efforts beyond GEF contribution On the basis of GEF's roles and functions with in the form of co-financing (e.g. counterpart, regard to the international conventions and agree- Implementing Agencies, bilateral), parallel fi- 98 Sttdv of GEFs Overall Performance nancing and financing for complementary and grating GEF activities into the country environ- follow-up activities. mental programs and contexts. 1.3 assess the frequency of use of the incremental 2.5 examine to what extent studies and national com- cost approach in project preparation, especially munication efforts, supported by the GEF, have in GEF's more recent portfolio, and its effects on encouraged involvement of local expertise and identifying and selecting cost-effective ways of have promoted institutional capacity building; achieving global environmental benefits as well as ink.7ing developmental environdment l benenvits n- 2.6 examine the effectiveness of modalities of coop- as linking developmental and global environ- eration between the lAs and recipient govern- mental objectives. ments under varying circumstances, and the 1.4 assess the efficiency of the GEF mechanism in degree to *which the identification and imple- disbursing financial resources once a project is mentation of projects is country-driven; approved by the GEF Council andl the Imple- 2.7 examine the degree to which participation of menting Agencies.b national or local interest groups and NGOs has been institutionalized or otherwise secured in decision making during project identification, The assessment will be based mainly on information design and implementation; resulting from visits to a sample of host countries. 2.8 assess how consideration is given to the principle that GEF-funded efforts should become finan- The study team shall: cially sustainable once the project is completed i.e. what efforts are made to secure long term 2. assess the GFF~s contributiontocountry-level government, private sector or other stakeholder processes that prepared countries to impleinenit contributions, or to establish trust funds, user the Convention on Biological Diversity and the fees or other revenue schemes for recurrent cost UN Framework Convention on Climate Change; financing in various focal areas and national con- assess its assistance to countries towards fulfill- ing their reporting requirements to the Conven- texts. tions, towards establishing national action plans 2.9 For transboundary projects, assess the adequacy and towards taking related measures in compli- of collaboration mechanisms and approaches be- ance with the Conventions; tween the various national and international ac- 2.2 Examine how incremental costs are negotiated tors involved. and agreed between the host governments and 3. INSTITUTIONAL ISSUES AND PROCEDURES GEF in project preparation; 2.3 examine to what extent environmental policies In close coordination with the convention secretariats which have a bearing on the success of GEF- in order to avoid unnecessary overlaps with their on- funded projects (e.g. price regimes) have been going reviews of GEF, the team shall: addressed in project documents, agreements and 3.1 examine how relations between the CBD and the during project implementation; UN FCCC and the GEF have evolved, especially 2.4 consider the extent to which GEF has contrib- with regard to operationalizing convention guid- uted to an increased awareness and support of ance in programs and projects; identify possible the global environment agenda at the country areas where further or clearer guidance would level; assess the GEF's information sharing activi- assist GEF's programming efforts. ties and contact network with relevant institu- 3.2 examine the information sharing and the formal tions/organizations in participating countries. and informal collaboration and coordination be- Cons:der whether institutions and organizations tween the relevant convention secretariats and implementing GEF-funded projects have devel- the GEF Secretariat, as well as between the Par- oped and contributed to transmitting a corporate ties to the Conventions and the GEF Council identity and organizational mission, and exam- members; ine whether the GEF Focal Point system is inte- Annex 1. Te rms of Reference 99 Further, the team shall: * demand side versus supply side measures 3.3 examine GEF's contribution to mainstreaming (e.g. providing better technologies for supply- examine GEF's contribution to mainstreaming ing energy versus reducing energy demand at global envronmental concerns into regular op-the source) erations and policy advice in the participating agencies; examine the extent to which prcce- * capacity building and research activities ver- dural steps have been taken in the lAs to secu-re a sus investment activities; better integration of global environmental con- 4.3 assess broadly how successful the GEF has been cerns in programmatic objectives and at the in supporting projects which can be expected to project level; result in clearly identifiable global environmental 3.4 assess the current GEF procedures and guide- benefits in the short or long run; and in lines for Project Cycle Management, including operationalizing and disseminating the incre- planning, implementation, monitoring and mental cost concept in a useful way; evaluation, as well as estimating the base]ine 4.4 assess whether the GEF via its project portfolio in situation of projects and selection of project iridi- the four focal areas is making use of viable con- cators. Consider whether the expedited proce- cepts, approaches, designs and technologies; as- dures for project approval are well balanced with sess whether the GEF is focusing on regard to securing quality at entry as well as environmental issues or areas which constitute expedient decision making. large threats or hold the promise of big gains; 3.5 examine the division of work and the mecha- discuss whether GEF is striking an adequate bal- nisms for cooperation between the GEF Secre- ance between supporting established project tariat, the Implementing Agencies, STlAP, types on the one hand and encouraging executing agencies, NGOs, and other relevant innovativeness, experimentation, new and un- organizations; assess to what extent the roles are proved approaches and designs on the other. complementary and whether the cooperation- is 4.5 examine the extent to which the composition of effective in utilizing the combined institutional the GFpoet to is v the priori- competence in a atisfactory way;the GEF project portfolio is driven by the priori- competence in a satisfactory way; ties defined in the Operational Strategy, the Op- 3.6 assess the adequacy of the procedures and erational Programs or other GEF key document; achievements of the GEF Secretariat and Imple- assess the cooperation between the Secretariat menting Agencies in drawing lessons for ongc ing and Implementing Agencies with governments, amendments and improvements of operations NGOs and other stakeholders to prioritize and and management. identify projects that respond to GEF objectives, 4. GEF's PROGRAMMING EFFORTS 4.6 assess the extent to which GEF activities have contributed to, or have the potential to contrib- The team shall. ute to, learning from experience, demonstration and replication effects. 4.1 describe how GEF's program objectives, goals and criteria have evolved on the basis of the 5. PROJECT IMPLEMENTATION LESSONS above-named conventions, international agree- ments, the GEF Instrument, the Operational Drawing mainly on the experience of the 1996 GEF Strategy, Operational Programs, as well as other Project Implementation Review, the "Evaluation of Council documents or decisions. Project Lessons", as well as its own first hand informa- 4.2 discuss GEF's programming efforts concerning: tion, the team shall: 5.1 Discuss the main lessons learned in project implementation to date, i.a.: * short term and long term measures (e.g. im- Prospects for sustainabilit and replication of mediate reduction of greenhouse gas through project outcomes, including global environ- technology transfer versus capacity building mental benefits; to teach energy conservation measures); 100 Stucdy of GEFs Overall Performance * Ways in which global environmental benefits executing agencies, STAP, NGOs and other organiza- and incremental costs are estimated in tions and with the preparation of the final report. projects; • Experience with timely provision of co-fi- National or regional team members will be re- n gand government counterpart contri- cruited to take part in the conduct of the country naniong; studies. These will have general competence in the butions; same areas as the international team members, and * Experience with stakeholder involvement; good overview of the national issues, institutions and persons in the relevant fields. * Private sector (NGO and for-profit) involve- p ment in the project-, An International Expert Advisory Panel of about * Experience with regional collaboration 6 - 7 renowned members with extensive background mechanisms; and knowledge of global environmental issues and * The extent to which the project includes inno- measures will be convened by the GEF Senior Moni- and is carrying out innovative ap- toring and Evaluation Coordinator. It is envisaged that vations, and is carrying out innovative ap- the International Panel will meet at the inception and pzroaches; and proaches; and final stages of the study. * Information exchange and communication, including demonstration and replication of The principal objectives of the panel are to pro- viable projects. vide strategic guidance on the design and execution of the study, add assurance that the study is complete in 6. FOLLOW-UP OF THE 1994 INDEPENDENT EVALUATION coverage and a fully independent review of the accom- plishments of the GEF in the areas examined (see Describe and assess the adequacy of the follow-up of attached Terms of Reference for the Panel). the 1994 Independent Evaluation of the GEF. V. MODE OF WORK IV. STuDY TEAM The team members will familiarize themselves The study team will consist of a core team of with a Background Study that is being prepared for the intemational experts and a number of national or re- GEF Secretariat, as well as other relevant GEF docu- gional experts. ments, including the May 1994 Independent Evaluation of the GEF. Further documentary work on the basis of The team leader will have a high international country, institutional and project files is envisaged. standing, acknowledged integrity and good knowledge of global environmental issues. He or she will lead the The team will prepare an Inception Report, main work of operationalizing the study and be re- which is designed to operationalize the study, and sponsible for the drafting the final report. He/she will which will be discussed at, and finalized after, a semi- be employed full-time for the duration of the project nar with the Advisory Panel, GEF staffs and selected and be situated in the in GEF Monitoring and Evalua- individuals. The report will contain an overview of tion Unit in the GEF Secretariat and work under the data sources, plans for how to address the various guidance of the Senior Monitoring and Evaluation Co- study issues, outlines of questionnaires or structured ordinator. interview guides as well as a more detailed list of interviewees and modes and schedules for the imple- The other international team members will be mentation of the study. renowned focal area experts, with experience in policy and program formulation, evaluation, and/or manage- The number of countries visited by the study ment of environmental or development assistance. team members will be limited to 10. The countries Most international team members will participate in were selected on the basis of the following criteria: country visits. Some are expected to be available for other work such as conducting interviews with the Number of GEF projects and size of funds allo- convention secretariats, the GEF Implementing and cated, Annex 1. Terms of Referenice 101 * Good representation of the various focal areas, tions, including in stakeholder involvement in GEF Countries hosting well performing as well as less policy and projects and in Implementing Agencies well performing projects, assistance processes. * Length of GEF involvement, The principal objectives of the Panel are to pro- Various institutional models for responding to vide strategic guidance on the approach and imple- GEF initiatives mentation of the study and added assurance that the study is complete in coverage and a fully independent * GDP per capita, review of the accomplishments of the GEF in the areas * Geographical representativeness. to be examined. Teams comprising two international members The Panel will be convened early in the imple- and one national member will conduct studies in BIra- mentation of the Overall Performance Study to review zil, China, Egypt, India, Indonesia, Kenya, Mexico, the study's scope of work, the method of conducting Poland, Russia, and Zimbabwe. In order to seek a more the study, and the work plan developed by the study comprehensive picture of GEF at the country level, team. This meeting is expected to occur in June, 1997. structured interviews by local consultants will be con- At this first meeting, the Panel will select from its ducted in Argrentina, Costa Rica, Cote d'Ivoire, Jordan, members a Chairperson. On the basis of its review, the Philippines, and Vietnam. Panel will prepare a report to the Senior M&E Coordi- nator and the study's Team Leader on its views regard- On the basis of specific agreements in each case, ing the work plan and approach. the Country Focal Points assisted by the field missions of the Implementing Agencies (lAs) of the GEF, the revieThe Panel will be convened a second time to World Bank, UNDP and UNEP will assist in the pre pa- review the draft final report of the study team. This Worationkr the Pcontr asEssments.s T min t prep meeting is expected to occur in October, 1997. The ratilonsisrthe ofu60-0 pasesplusmappents.ihes incin ng rPanel will meet with the Team Leader and other mem- will consist of 60-80 pages plus appendices, including bers of the evaluation team to review and provide i.a. list of all interviews and data sources. It will be written in MS Word 6.0. guidance on their preliminary findings and conclu- sions. The Panel will prepare a report to the Senior 'AL SCOPE Of WORK FOR THE EXPERT M&E Coordinator which provides its comments and ADVISORY PANEL suggestions on the report, and recommendations for further study. This report will be submitted by the Senior M&E Coordinator to the GEF Council and GEF An international Expert Advisory Panel wilL be Assembly, together with the final study report. convened by the GEF Senior Monitoring and Evatua- tion Coordinator to provide overall guidance to the In addition to these two formal meetings, the Expert study team. It will be made up of 6-7 members with Advisory Panel will be available to consult with the extensive background in and excellent knowledgE of Senior M&E Coordinator, the study's Team Leader, global environmental issues and measures. Panel and individual team members on matters related to the members will be representative of different regions of conduct, at various stages, of the Overall Performance the world and GEF stakeholder groups, including Study. NGOs and have expertise in key aspects of GEF opera- 102 Sttudy of GEFs Overall Performance ANNEX 2. REPORT OF THE INTERNATIONAL EXPERT ADVISORY PANEL FOR THE STUDY OF GEF's OVERALL PERFORMANCE JANUARY 1998 Upon encouragement from the GEF Council at able numbers and there is no agreement as to criteria. its Spring 1997 meeting, the Senior Monitoring and A global organization/mechanism to establish the va- Evaluation Coordinator in the GEF Secretariat con- lidity of such numbers does not exist. Nevertheless, it vened an International Expert Advisory Panel to pro- is clear that levels of funding for the environment, and vide guidance to the Study of GEF's Overall to address global environmental problems in particu- Performance and to assure that the study is complete lar, are still inadequate in relation to the threats and in coverage and a fully independent review. problems. New and additional resources are urgently needed by GEF, national governments and other inter- The Panel met in Washington, D.C. on June 27, national organizations, based on common but differ- 1997, to review the Terms of Reference and Inception entiated responsibilities among nations. The donors Report for the study and on October 27-29, 1997, to need to be careful, however, not to further degrade the review the first draft of the report prepared by the concept of "new atid additional", given its importance study team. The Panel provided detailed reactions, to the underlying political support for the GEF. comments and guidance to the GEF Senior Monitoring and Evaluation Coordinator and to the study team to There would be considerable benefit in establish- assist it in completing the report of the study. The final ing more coordinated strategies at the country level to draft of the team's study was shared with the Panel for address environmental problems. In this regard, the further review and comment prior to the completion of Panel supports the recommendation of the study team the study, and a third meeting was held in Paris on that GEF implementing agencies, in association with January 17, 1998, to prepare this report. All the com- national govemments, initiate Environmental Consul- ments to the draft study by Council members and tative Group meetings at the country level. Such others were shared with the Panel. groups would be made up of all donors providing climate, biodiversity and other GEF mandate-related In addition to its comments on the study report assistance to the country, as well as a range of govern- itself, the Panel agreed on a number of conclusions and ment agencies and other organizations, including the recommendations to the GEF Council on the topics private sector, interested in environmental issues. The examined by the Overall Performance Study. These are objective of these consultative groups would be to presented in this report. advise on the reduction of duplication, identification of gaps where additional efforts are needed, ways to MOBILIZATION OF RESOURCES FOR THE GLOBAL make optimum use of resources to address global envi- ENVIRONMENT ronmental problems, and how to assure the continua- tion and sustainability of activities initiated with Based on the information analyzed for the study, support from the GEF. it appears that there has been a gradual overall increase in investments for the environment over the last five The Panel believes that it is important to empha- years. Levels of official development assistance (ODA) size the international public good nature of the GEF may have decreased, but overall-including invest- and the need to sustain funding for global environ- ments by developing countries themselves and the mental investments over time. The Panel would also private sector-there has been an increase. This con- note the responsibility of the developed countries with clusion is necessarily tentative, since there are no reli- regard to their own policies and programs that influ- Annex 2. Report of SeniorAdvisory Panel 103 ence global environmental outcomes. The recent UNDP is limited to date. However, it also noted that, to Kyoto Conference clarified those responsibilities and be effective, this kind of mainstreaming has to be built the importance of action by developed counties in on partnerships between these implementing agencies their ownl realms even as the GEF focuses on global and governments in recipient countries. Overall coun- environmental issues in developing countries. try strategies and programs are not the product of the World Bank and UNDP alone. National and donor The GEF should explore additional ideas and priorities are focused on poverty alleviation, sustain- mechanisms to expand the involvement of the private able livelihoods, and elimination of gender inequity. sector in addressing global environmental issues. This However, the linkages between these priorities and would include not only private businesses, but also the environmental issues, including global environmental major international philanthropic foundations ancd en- issues, are clear and important. To take one example in vironmental organizations. The Panel recommends the area of climate change, the energy investments that the GEF consider organizing a workshop with (especially fossil fuels) create special challenges for the private sector organizations such as the World Busi- World Bank in the evident contradiction between ness Council for Sustainable Development to suggest greater energy production and the reduction of green- opportunities for greater involvement of the private house gases. The Panel, except for one member, be- sector. The Panel is concerned about the level of re- lieves that the Bank will have to do more to take such sources available to address the issues in the interna- global impacts into account. The World Bank and tional waters focal area. The lack of parity with cther UNDP should make greater efforts at the country level focal areas is addressed in the study team's report, and to raise awareness of these linkages and of the impor- the Panel strongly believes that the international com- tance of addressing environmental issues, and in this munity will have to address this in the near futu-e in way increasingly mainstream them in their country order to enable the GEF and other organizations to assistance strategies and programs. The proposed na- devote additional resources. tional committees for GEF could also help in this regard. The implementing agencies, in carrying out the Similarly, the GEF should initiate further steps to GEF mandate, may also need to re-examine the poten- identify mechanisms for the expanded involvement of tial for influencing their other partners, such as the the international scientific and academic commurnities International Monetary Fund. in the effective implementation of its mandate. The general roles of the three implementing There is a need for greater public awareness and agencies within the GEF should, in the near term, understanding of global environmental issues and the remain basically as they are evolving. The Panel ex- role the GEF is playing to address them. Some of this pects that this would mean that the World Bank would effort could be carried out by the GEF directly. In likely be the major financing channel for disbursing addition, national committees for GEF, which shDuld GEF resources. Among the World Bank institutions, include government, NGO, business, scientific and the majority of Panel members, through not all, finds other representatives, could be formed to play a role in that the International Finance Corporation has signifi- this regard. There may also be opportunities to wvork cant potential to expand its GEF-related financing. As with regional groupings in this area, as well. At. the for the UNEP, the Panel notes the broad international country level, the implementing agencies should make discussion about UNEP's future in recent years, and greater efforts to describe and identify GEF-funded the fact that the UN Secretary-General has called for a activities with the GEF rather than with the agencies review. The Panel hopes that UNEP will make con- themselves. structive strides to play such a useful role as envisioned for it by the GEF founders. In the future a fourth INSTITUTIONAL ROLES AND RELATIONSHIPS "partner" might be the private sector, including foun- dations-not necessarily as implementing agencies, The GEF has emphasized the importance of but as a fuller partner within the GEF, for example, for mainstreaming the global environment in the Imple- technology transfer. The recommended workshop menting Agencies. The Panel is disappointed to note with the World Business Council for Sustainable De- the study team's conclusion that mainstreaming of velopment might explore ways this partnership could global environmental concerns into the regular (non- be developed and institutionalized. GEF) strategies and programs of the World Bank and 104 Study of GEFs Overall Performance The Panel believes that the GEF should devote ing agencies for GEF approval. The Panel stressed that, continued efforts to streamline the procedures for de- in fact, neither should it be the role of the implement- signing, approving and implementing projects, and to ing agencies to micro-manage projects, since recipient make these procedures simpler and more nationally- countries should have the principal project manage- driven, but without abandoning high quality stan- ment responsibility. dards. The UNDP-managed Small Grants Programme has, by all reports, been very successful in this regard, The Panel noted the valuable and important and the new expedited medium-sized project proce- work performed by the STAP since the creation of the dures also have potential to make significant strides in GEF. However, it noted that during the past five years, this direction. In view of this, the Panel suggests that a number of other strong, government-approved sci- the GEF consider raising the ceilings for maximum entific bodies have been created, including the subsid- project size under the Small Grants Programme and iary bodies of the two conventions for which the GEF under the medium-sized projects procedures with a is the interim financial mechanism. The Panel recom- view to increasing the percentage of the projects mends that the Council review the future mandate, funded by the GEF that benefit from expedited proce- scope and role of the STAP taking into consideration dures. In addition, as a step toward expediting project the existence of these other bodies. approval procedures, the Panel concurs with the study team's recommendation that the GEF Council seri- COUNTRY-LEVEL ISSUES ously consider delegating its second review of project proposals to the Secretariat. It is important that there is a correspondence between the project idea and country interests, priori- The Panel noted the discussion in the draft study ties and policies. It is not a prerequisite that the idea report of the merits of expanding the number of GEF always originate in the country, since the benefits of implementing agencies from the existing three. This is GEF projects are designed to transcend national priori- not a new issue, and has been the subject of a number ties. Project management should be "driven" by orga- of NGO letters to the Chairman of the Panel. Upon nizations and individuals of the stakeholder country or consideration of the arguments on both sides of this countries. Finally, ownership is closely related to, and issue, the Panel believes that, for the moment, the GEF reflected in, the long-term sustainability of project should focus on consolidating its strengths and activities. Thus, even though an idea for a GEF-funded streamlining procedures and should not, at least for project may initially come from outside the country, it the near future, expand the number of implementing is essential that management responsibility be with the agencies. However, the Panel encourages the three country and that the country commitment to and own- existing implementing agencies to look for increased ership of the activity be such that it will be sustained opportunities to involve regional development banks following the completion of the GEF project. and other suitable organizations in GEF programs implemented through them. In addition, the Panel The Panel believes that the study team brought recommends that the GEF undertake a study to exam- out a number of good points on the issue of the use of ine the potential for lowering transaction costs by in- foreign consultants in GEF projects, and the impact cluding other organizations as GEF implementing this can have on country ownership. The Panel recog- agencies. nizes that in areas related to the global environment there is sometimes a need for expertise from outside The Panel believes that it is essential for the developing countries. However, the Panel believes that effective operation of the GEF that there be a Secre- the need for foreign consultants is likely more often to tariat that plays a strong coordinating and catalytic role be the exception rather than the rule, and that GEF's within the GEF family. Its focus should be on strategic implementing agencies should give a strong emphasis and policy issues, aimed at creating common systems to involving local and regional expertise in the design, and approaches for the GEF as a whole. It should analysis and implementation of GEF projects, includ- promote strategic alliances within the GEF family and, ing PDF activities. for example, with the climate change and biological diversity convention secretariats. The GEF secretariat's The GEF's emphasis on stakeholder participation role should not include micro-management or detailed has led a number of countries to recognize the positive review of project designs presented by the implement- contributions that NGOs and other stakeholders can Annex 2. Report of Senior Advisory Panel 105 make to the solution of global environment and na- In order to ensure greater clarity in the criteria tional development problems. The Panel encourages for calculating and negotiating the incremental costs the GEF to continue its emphasis on stakeholder par- on which GEF-funded projects are based, the Panel ticipation and to look for ways to do more in this area, endorses the recommendation of the study team that a especially in the area of monitoring and evaluation. working group of representatives from the GEF and The creation of national committees for GEF involving convention secretariats and implementing agencies be a wide range of organizations and interests, as sug- formed to explore ways to make the process of deter- gested earlier, might help identify the ways this could mining incremental costs more flexible and easier for be done. recipient countries. The GEF has a key role to play in raising aware- PROGRAMME ISSUES ness of global environmental issues in the countries where it works, and in this way helping assure that In terms of the allocation of resources among these considerations are increasingly reflected in co-un- developing countries, the Panel endorses the view ex- try policies, regulations and priorities. The Panel r ec- pressed by the study team that further efforts for prior- ognizes that the process of impacting policies and ity setting would be desirable in all focal areas. For programs has just begun, especially in those countries example, within "Climate Change" high emitting where GEF resources are dwarfed by the scale of other countries or regions with conducive policies for abate- investments. In particular, the Panel recognizes the ment and promising technologies should be the main contributions of the Small Grants Programme to focus of GEF funding. International waters needs en- mainstreaming environmental concerns more broadly hanced attention by GEF and other relevant organiza- in the countries where it has functioned. The Panel tions. This requires additional funds. encourages the Council to look for additional mecha- nisms through which the GEF, working with its imple- FINAL COMMENTS menting agencies, the climate and biological diversity conventions and others, can help create a broader The Panel believes that the world requires a well- public understanding of global environmental issues run multilateral mechanism for worldwide "ecological in developing countries. One such mechanism might security". Global environmental issues cannot be left be for GEF to provide support to media resource cen- exclusively to the multitude of bilateral negotiations ters in some countries. and efforts underway. That multilateral funding mechanism is the GEF. The GEF should be continued PROJECT ISSUES and strengthened. The Panel recommends that all GEF projects Based on its review of the Overall Performance incorporate a specific withdrawal strategy in their de- study and the draft report, the Panel believes the study sign. Such a strategy would address how the activities team has conducted an honest and independent as- supported by the project would be sustained over the sessment of the GEF. The Panel compliments the team long term following completion of GEF funding. on its work. It also compliments GEF's Senior Moni- While the specific approaches will vary project by toring and Evaluation Coordinator on the procedures project, the Panel believes it is very important to focus followed in designing and carrying out the study, on long term sustainability at the beginning of project which have contributed greatly to the quality and ob- support. The Panel believes that the analysis con- jectivity of the assessment. The Panel believes that the ducted for the design of each GEF project should study will be very useful to the GEF family and others identify the costs of long-term sustainabilitv. The interested in the GEF, and recommends that compre- sources of such future support clearly would need to hensive assessments of the accomplishments of the GEF be identified over time, but it is useful to identify likely be conducted at appropriate intervals in the future when future requirements at the outset so that proactive there will be additional basis for determining the im- measures can be taken to assure continuity. pacts and effectiveness of GEF-funded activities. 106 Shttdv of GEFs Overalt Performance ANNEX 3. LisT OF INTERVIEWS AND PROJECr SITE VISITS A. IMPLEMENTING AGENCIES (Headquar- - Selected NGOs ters) - PROCEL (National Energy Efficiency Pro- UNDP gram), Rio de Janeiro - UNEP - SEAIN (Ministry of Planning - GEF Focal - The World Bank Point) - Secretariat of International Affairs B. SCIENTIFIC AND TECHNICAL ADVI- - UNDP Brazil Country Office SORY PANEL (STAP) - Wind Energy Test Center, Recife C. CONVENTION SECRETARIATS - World Bank Resident Mission - Secretariat of the Convention on Biological - WWF Brazil Diversity - Secretariat of the UN Framework Convention 2. CHINA on Climate Change - Chinese Academy of Sciences - Chinese Academy of Environmental Sciences D. GEF SECRETARIAT - Energy Research Institute - Forestry Department of Hubei Province E. COUNTRY VISITS: - Hubei Province Govemor's Office 1. BRAZIL - Ministry of Coal Industry - Agencia para Aplicacao de Energia (Energy - Ministry of Communications Efficiency Organization), Sao Paulo - Ministry of Finance, World Bank Department - Ceara State Ministry for Transportation, En- - Ministry of Foreign Affairs ergy, Communication and Works, Fortaleza - Ministry of Forestry, GEF Nature Reserves - CEPEL (National Energy Testing Lab), Recife Project Office - CHESF (regional electric utility) Biogas - National Environment Protection Agency Project Staff - Shennongjia Nature Reserve - COELCE (Ceara State Utility with renewable - ShenEonomic atr Rrve - State Economic and Trade Commission energy program), Fortaleza - State Planning Commission - DNAEE (Energy Regulatory Agency) - State Science and Technology Commission - EMBRAPA-CENARGEN - Tsinghua University, Institute for Nuclear En- - Fundacion Pro-Natura ergy Technology (INET) - GTAP (Inter-Ministerial Panel for GEF - UNDP China Country Office Projects) - World Bank Resident Mission - Instituto Sociedade, Populacao e Natureza (Small Grants Coordinating NGO) - Instituto Brasileiro do Meio Ambiente e dos 3. FGYPT Recursos Naturais Renovaveis - Ministerio de - Egyptian Environmental Affairs Agency Meio Ambiente dos Recursos Hidricos e da - Ministry of Agriculture, Undersecretariat for Amazonia Legal Afforestation - Ministry of Energy, Department of Decentral- - New and Renewable Energy Authority ized Energy - Organization for Energy Conservation and - Ministry of Science and Technology Planning Annex 3. List of Interviews and Projfect Site Visits 107 - Red Sea Governorate - Indonesian Institute of Sciences, Bogor - Red Sea Coastal and Marine Resource Man- - Institute of Technology, Bandung agement Project Office - International Finance Corporation (IFC) - Tourism Development Authority Country Office - UNDP Egypt Country Office - Ministry of Agriculture: Agency for Agricul- - UNEP tural Research and Development, Bogor - US Agency for International Development - Ministry of Environment (USAID) Office of Environment - Ministry of Finance: Directorate General for - World Bank Resident Mission External Funds; Bureau of Planning and Inter- national Cooperation 4. INDIA - Ministry of Forestry: Directorate of Programme - Al Kabeer Exports Ltd. (Biomethanation and Directorate General of Forest Protection project), Hyderabad - Ministry of Mines and Energy - Center for Science and Environment - National Development Planning Office - Confederation of Indian Industries (BAPPENAS) - Development Alternatives - The Nature Conservancy - Energy Management Centre - Sudimara (private solar firm), Jakarta - GTZ Resident Mission, Bangalore - UNESCO Country Office - Indian Institute of Public Administration - UNDP Indonesia Country Office - Indian Institute of Science, Bangalore - UNIDO Country Office - Indian Renewable Energy Development Au- - US Agency for International Development thority (IRFDA) (USAID) - Ministry of Economic Affairs - World Bank Resident Mission - Ministry of Environment and Forests - World Wild Fund for Nature - Ministry of Non-Conventional Energy Sources - YBUL (NGO), Jakarta - National Cleaner Production Center - Tamil Nadu Energy Development Agency, 6. KENYA Chennai - Climate Network Africa - Tamil Nadu Electricity Board, Chennai - Embu Clinics (Small Grants Project NGO) - UNDP India Country Office - Food and Agriculture Organization (FAO) - Vestas India Ltd. (wind machine manufac- Kenya Country Office turer), Chennai - International Finance Corporation - Winrock International - Kenya Association of Manufacturers - World Bank Resident Mission - Kenya Wildlife Service - World Wildlife Federation - Lake Victoria Environmental Management Programme, National Secretariat 5. INDONESIA - Ministry of Energy, Renewable Energy Unit - Agency for the Assessment and Application of - Ministry of Environment: National Environ- Technology (BPPT) ment Secretariat - Asian Development Bank Resident Mission - Ministry of Finance - Association of South-East Asian Nations - Ministry of Planning and National Development - British Petroleum Indonesia - Ministry of Water - BP Solar - National Environmental Action Plan (NEAP) - Center for Environmental Studies, Bogor Ag- secretariat ricultural University - OSIENALA (Friends of Lake Victoria) - Department of Forest Resources Conserva- - Rural Initiatives for Sustainable Development tion, Bogor Agricultural University (RISDEV - Small Grants Project NGO) - Indonesian Biodiversity Foundation - Total Oil Kenya Limited - UNDP Kenya Country Office 108 Study of GEF's Overall Performnance - Wildlife Clubs of Kenya - Lighting Project Implementing Agency - Pol- - World Bank Resident Mission ish Efficient Lighting Project (PELP) - World Conservation Union - Ministry of Economy: Department of Indus- trial Policy; Department of Multilateral Eco- 7. MEXICO nomic Relations; Ozone Layer Protection Unit - Centro de Estudios del Sector Privado para el - Ministry of Environmental Protection, Natural Desarrollo Sustentable (Cespedes) Resources and Forestry - Comisidn de Ecologia de la Confederacion de - Ministry of Environment (General Directorate Camaras Industriales (CONCAMIN) of State Forests) - Comision Nacional para el Uso y - Ministry of Finance: Foreign Department Conocimiento de la Biodiversidad (CONABIO) - Ministry of Foreign Affairs: Department of UN - Conservacion Internacional System - Fondo Mexicano para la Conservacion de la - National Foundation for Environmental Pro- Naturaleza tection - Instituto Nacional de Ecologia - National Fund for Environmental Protection - Instituto Nacional de la Pesca and Water Management - Organismos Financieros Internacionales, - Polish Ecological Club, Krakow Secretaria de Hacienda y Credito Publico - Polish Energy Efficiency Agency - PNUMA - Polish Environmental Partnership Foundation - PNUD - Puszcza Bialowieska, Gruszki - Pronatura A.C. - Social Ecological Institute - Recursos Naturales y Pesca, Secretaria de - UNDP Poland Country Office Medio Ambiente - Voivod Office of Krakow, Environment Pro- - Secretaria de Energia tection Department - Secretaria de Medio Ambiente, Recursos - World Bank Resident Mission Naturales y Pesca - Secretaria de Relaciones Exteriores, Direccidn 9. RUSSIA General de Cooperacion Tecnica y Cientifica - Biodiversity Conservation Center - The Nature Conservancy, Mexico Program - - Institute of Energy Saving and Ecological Arlington Problems, Moscow - The Nature Conservancy - March for Parks, NGO - Ministry of Energy and Fuels: Department on 8. POL4ND Energy Efficiency; Institute of Energy Saving - Agricultural University Faculty of Forestry, and Ecological Problems Department of Forest Utilization - Ministry of Science and Technology - Association for Nature "WOLF" - Russian Energy Efficiency Demonstration - Bank for Environmental Protection (BOS) Zones, Moscow - Bialowieza Forest Protection Society, Bialowieza - Russian Federal Service for Hydrometeorol- - City of Krakow, Mayor's Office ogy and Environmental Monitoring - District Heating Company, Krakow - Socio-Ecological Union - Ecofund - State Committee of the Russian Federation for - Food and Agriculture Organization (FAO) Environmental Protection: Centre for Prepa- - Foundation for Energy Efficiency, Krakow ration and Implementation of International Projects on Technical Assistance; Ozone De- - Industrial Chemistry Research Institute, pleting Substances Phase-Out Project Imple- Ozone Layer Protection UnitmetioGru - Institute for Environmental Protection - enPRuia Coun - Institute for Sustainable Development - WrDB Resident Misi - World Bank Resodent Mmssion - Institute of Waste Management WFRusaPrganeOfc Ainnex 3. List of Interviews and Project Site Visits 109 10. ZIMBABWE - Masvingho Provincial Government, Parks De- - Africa 2000/GEF Small Grants Programme partment - Biomass User's Netwvork - Ministry of Environment - Campfire Association - Ministry of Finance and Economic Planning - Chiredzi District Council - National Parks Department - Environment 2000 - Save Valley Conservancy - Forestry Commission - The Southern Center - GEF Photovoltaics Project Coordination Of.§ice - UNDP Zimbabwe Country Office - Glen Forest Training Centre - University of Zimbabwe, Center for Applied - Jebesa Pfungwa (NGO) Social Studies - Mahenye District Campfire Committee - World Bank Resident Mission F. PROJECT SITE VISITS Country Project Focal Area Date of Visit Brazil Biomass Integrated Gasification and Generation Project Climate Change 7/97 (Pilot Phase) China Development of Coal-bed Methane Resources Project: Climate Change 7/97 Kailuan Coal Mining Administration (Pilot Phase) China Nature Reserves Management Project: Shennongjia Biodiversity 7/97 Nature Reserve (GEF I) Egypt Red Sea Coastal and Marine Resource Biodiversity 8/97 Management: Hurghada (Pilot Phase) India Alternate Energy (Wind Power) Project: the State Climate Change 7/97 of Tamil Nadu (Pilot Phase) India Development of High Rate Biomethanation Processes: Climate Change 8/97 Al Kabeer Slaughterhouse (Pilot Phase) Indonesia Indonesia Solar Homes Project: Sudimara Co., Climate Change 8/97 Pelabuhan Ratu (GEF I) Kenya Lake Victoria Environmental Management International Waters 8/97 Project: Kisumu (GEF 1) Poland Forest Biodiversity Protection: Bialowieza Biodiversity 7/97 Primeval Forest (Pilot Phase) Poland Coal-to-Gas Project: Jura Housing Corporation & Climate Change 7/97 Jura Cooperative in Chestahova, Krakow (Pilot Phase) Russia Biodiversity Conservation: Losiny Ostrov National Biodiversity 7/97 Park & Prioksko-Terrasny State Biosphere Reserve (Pilot Phase) Russia Phase-out of Ozone Depleting Substances: Joint Ozone Depletion 7/97 Stock Company "Garmonia" (aerosol company) (GEF I) Zimbabwe Biodiversity Conservation in S. E. Zimbabwe: Biodiversity 8/97 Gonarezhou National Park (Pilot Phase) 110 Stody of GFFs Overall Performancue - Zimbabwe Electricity Supply Authority - Instituto Meteorologico Nacional (ZESA) - Superior Direction of Cooperation and Inter- - Zimbabwe Energy Research Organization national Affairs (ZERO) - Fundecooperacion - Zimbabwe Women's Bureau 3. COTE D'IVOIRE G. "DESK" STUDY COUNTRIES - Ministry of the Environment 1. ARGENTINA - Deputy Director of the Environment and Focal - finisterio de Relaciones Exteriores, Secretaria Point, Convention on Biodiversity Focal Point de Relaciones Exteriores y Asuntos - Technical Advisor to the Minister of the Envi- Latinoamericanos, Direccion de Cooperacion ronment and Focal Point, Convention on Cli- Internacional (Ministry of Foreign Relations mate Change and Latin American Affairs Secretary, Intema- - Programme Cadre de Gestion des Aires Proteges tional Cooperation Direction) - Gulf of Guinea - Large Marine Ecosystem - Secretaria de Energia, Ministerio de Economia Project Office de la Nacion (Secretariat of Energy, Ministry - GEF Small Grants Programme (IVC/93/G51) of Economy of the Nation) - UNDP Cbte d'Ivoire Country Office - Consejo Nacional de Investigaciones - Community-Based Natural Resource and Cientificas y Tecnicas (CONICET) - Atmo- Wildlife Management Project sphere Sciences Department, Universidad de - Environment Impact Assessment Unit, Minis- Buenos Aires (UBA) try of the Environment - GEF Biodiversity Enabling Activity Coordina- - Agence Africaine d'Assistance pour tion Unit l'Environnement et le Developpement (NGO) - Direccion Nacional de Fortalecimiento - Projet Efficacite Energetique dans les Institucional, Secretaria de Recursos Natu- Batiments rales y Desarrollo Sustentable de la Nacion - Projet de Lutte contre les Vegetaux - Natural Resources and Sustainable Develop- Acquatiques Envahissants Les Plans d'Eau ment National Secretariat pour Ameliorer la Diversite Biologique - National Parks Administration - Groupement d'Interet Economique des - National Institute of Agropecuarian Technol- Femmes de Bezibozouzoua(NGO) ogy (INTA) - C6te d'Ivoire Ecologie (NGO) - GEF PDF project - Conservation of - NEAP Technical Advisor Biodiversity in Threatened Ecosystems - Project Manager - Elevage de la Faune - UNDP Country Office Sauvage et Culture des Champignons - Asociaci6n Ornitol6gica del Plata - Fundaci6n Vida Silvestre 4. JORDAN - Fundacion Recursos Naturales y Medio - Project Manager: Azraq Oasis Conservation Ambiente Project - Fundaci6n Patagonia Natural - GEF National Focal Point, Ministry of Planning - Royal Society for the Conservation of Nature 2. COSTA RICA (RSCN) - Ministerio de Ambiente y Energia - Jordan Biogas Company - Wildlife Conservation Society - Friends of En-vironment Society - Fundacion de Parques Nacionales - Jordan Biogas Project - PNUD - GEF Small Grants Program National Coordi- - Instituto Nacional de Biodiversidad nator Arnex 3. List of Interviews ancl Project Site Visits 111 - University of Jordan, Jordan Country - Protected Areas and Wildlife Bureau, Ninoy Biodiversity Study Office Aquino Protected Area and Wildlife Nature - Project Coordinator, Climate Change Project Center - Royal Society for the Conservation of Nature - Philippine Sustainable Development Network (RSCN) (NGO) - General Corporation for Environment Protec- - Foundation for the Philippine Environment tion (GCEP) - NGOs for Integrated Protected Areas, Inc. - UNDP Philippines Country Office 5. PHILIPPINES - Conservation of Priority Protected Areas 6. VIETNAM (CPPAP), Protected Areas and Wildlife Bureau - Policy Division, NEA (National Focal Point) - CPPAP, Ninoy Aquino Protected Area Wild- - UNDP Vietnam Country Office life and Nature Center - Institute of Meteorology and Hydrology - Kitanglad Integrated NGOs (Host NGO) - Conservation and Environment Division, For- - CPPAP Mt. Kitanglad Range National Park, est Protection Department Provincial ENR Office - Ministry of Agriculture & Rural Development - Leyte-Luzon Geothermal Project - Ministry of Industry: Energy Institute - PNOC-Energy Development Corporation - Ministry of Planning and Investment: Foreign - Regional Progamme for the Prevention and Economic Relations Department Management of Marine Pollution in the East - WWF Indochina Programme Asian Seas - Department of Zoology, Institute of Ecology - Environmental Management Bureau and Biological Resources - Environmental Protection and Monitoring Di- - Cuc Phuong Training Center vision, Department of Energy - Energy Economics Division